Demand for canola expected to be strong this winter as the EU looks for fuel and feed due to drought and war
The United States Department of Agriculture is forecasting strong canola demand from the European Union in 2022-23 and noted that Canada could be gaining ground in that market.
At first it appeared as though the EU was going to have a big increase in production. Farmers there planted 10 percent more rapeseed than the previous year in response to high prices.
It was the first big increase since the EU banned neonicotinoids in 2018, resulting in reduced profitability for the crop and a sharp reduction in acres the following year.
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But the huge jump in acres in 2022 was partially offset by reduced yields caused by excessive heat and below average rainfall in Germany, France, Poland, Romania and Hungary.
The upshot is that the USDA’s Foreign Agricultural Service (FAS) is forecasting 18.2 million tonnes of production in 2022-23, which is six percent more than the previous year.
Consumption is expected to be strong, which is why the FAS is forecasting 5.6 million tonnes of canola imports, up slightly from last year’s 5.5 million tonnes.
Ukraine is the biggest supplier, typically providing 40 percent of the EU’s canola needs, according to the FAS.
“There is currently high uncertainty around the rapeseed export supply from Ukraine,” stated the FAS in its recent EU Oilseeds and Products Update report.
“The recovery of rapeseed (canola) production in Canada, and subsequent higher export availability, is expected to offset lower supplies from Ukraine and Australia.”
Canada, Ukraine and Australia account for 95 percent of the EU’s canola imports.
The FAS’s comment about lower Australian supplies flies in the face of recent comments made to The Western Producer by an Australian grain analyst.
James Maxwell, senior insights manager with Australian Crop Forecasters, is forecasting a record 6.8 million tonnes of Australian production, in line with what the Australian Oilseeds Federation is anticipating.
He estimates that the country will export 5.5 million tonnes of the crop in 2022-23, down slightly from 5.6 million tonnes last year but more than double the five-year average of 2.48 million tonnes.
The EU is by far the biggest market for Australian canola.
“Working in Australia’s favour is Canadian canola is almost exclusively GM canola,” Maxwell said in an email.
“The EU favours non-GM canola as although the majority of EU canola is used for biofuels, the meal can be used for stock feed.”
Yannick Dheilly, trade commissioner at the Canadian embassy in France, takes issue with that remark.
“When Canadian canola is imported to the EU, the GMO meal is actually fed to European animals,” he said in a recent email.
He acknowledged that some breeder organizations are not willing to feed their animals GM canola or soybean meal because they guarantee that their meat products are GM-free.
“But many others don’t care. Basically, it is a marketing/technical choice they make,” said Dheilly.
Canadian canola meal is attractive in France because it has a much higher protein content than French rapeseed meal. One French feed broker website lists Canadian canola meal at 36 percent protein versus 32 percent for the French rapeseed meal.
Dheilly provided EU import data by calendar year, which seems to differ from the FAS data, particularly in terms of which country is the top canola supplier.
It shows the EU imported 5.06 million tonnes of the oilseed in 2021, down from 5.85 million tonnes the previous year, likely due to Canada’s poor crop.
Australia was the biggest supplier in 2021, providing 1.9 million tonnes, while Canada was the top exporter in 2020, shipping 2.6 million tonnes.
Ukraine ranked second in both of those years, not first as the FAS indicated.
The good news for all canola exporters is that EU crush margins remain very attractive, which is expected to result in a four percent increase in crush to 22.5 million tonnes in 2022-23, according to the FAS.
