A small U.S. crushing plant has temporarily shut down citing slumping demand for canola oil.
Northwood Mills, an 80,000-tonne-per-year plant that began operations in Northwood, North Dakota, in July 2007, stopped processing canola Jan. 7, 2009.
“The canola oil market has really softened up quite a bit,” said general manager Geoff Bengtson.
“We’re having a difficult time moving oil, as are many facilities like ours.”
Sales have slowed in food and fuel. Bengtson speculated the erosion in food demand is the result of people eating out less during the economic recession. Also, U.S. biodiesel production has fallen since crude oil prices tumbled.
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“A lot of the (biodiesel) facilities I was selling to a few months ago are either slowed or at idle,” he said.
Bengtson said crushers on both sides of the border are talking about slumping canola oil demand. The talk includes the huge 322 million litre Archer Daniels Midland canola crushing and biodiesel plant in Velva, N.D.
“I have heard that they have slowed down production,” he said.
ADM was contacted for this story but declined to comment.
The Prairie Star, a Montana agricultural newspaper, is also reporting faltering demand.
“Most oilseed crops have seen a slowdown in domestic crush,” said the editor in a recent market update.
A number of Canadian canola processors and industry officials were contacted for this story but did not return calls by deadline.
Angela Dansby, communications director with the U.S. Canola Association, doesn’t know what has happened in the last few months, but the long-term trend is promising for canola.
“I’m not aware of a slumping demand for canola. In fact, I would suggest it’s the opposite, that in fact the demand is only continuing to increase,” she said.
An AC Nielson survey of food retailers in the United States shows canola is the only oil that has experienced rising sales. The data was collected over a five year period ending Feb. 23, 2008.
“Canola is the only oil with increased volume since 2004, just slightly up in an overall downward market,” said Dansby.
A February 2008 poll of 400 purchasing executives at restaurants that are high volume users of cooking oils found that canola oil is the most switched to cooking oil in the U.S. restaurant industry because of its health attributes.
