World production of major oilseeds is surging ahead.
Fortunately for Canadian canola growers, it looks like vegetable oil consumption will keep pace with the expansion.
“Over the medium term we’re forecasting the vegetable oil market to grow, but at a slower pace,” said Agriculture Canada analyst Chris Beckman at an international canola conference in Winnipeg June 27.
“The main competition for canola-rapeseed oil will come from palm and soy oil. Over the medium term we’re expecting the production of palm oil-soy oil to increase, the production of canola oil to remain stable and sunflower seed oil to decline.”
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But these overall trends disguise important trends within the oilseed complex, other speakers said.
German vegetable oil expert Norbert Heim said European food processors are already worried about European Union canola stockpiles disappearing if the biodiesel industry expands.
“They look for oil from European rapeseed because in Europe we have a (controversy) about GMOs and nobody in the food industry will declare GMO (genetically modified organism) on their products,” said Heim.
If biodiesel makers consume too much GMO-free European canola, there might not be enough left for human food. And if there isn’t, European food manufacturers worry they won’t be able to find enough GMO-free vegetable oil outside the EU.
“In soybeans in the future, it will be not so easy to get oil that is not GMO, so they have to rely on rape oil.”
More than half of Germany’s canola crop is now used for fuel production. The EU has declared that biodiesel use will increase from about two percent of fuel used today to more than five percent by 2010. That means canola acreage will have to expand, Heim said.
If European production does not increase enough, European fuel providers will have to import biodiesel.
“They will buy it on the world market,” said Heim.
So far, European farmers have managed to keep up with the increased demand.
There are also high hopes for driving more canola use in North America, where canola’s healthful reputation should increase sales. New varieties of specialty canola oil could create a better market.
Ernie Unger of Cargill’s American specialty oils section said his company thinks its new high oleic acid canola oil will fit perfectly into a growing market for healthy oils.
North Americans increasingly worry about obesity, heart disease and other ailments and should be keen to consume more canola oil.
While Cargill will push its high oleic acid canola as a specialty product, it is not going to try to give it a new brand, he said. The oilseed already has a good reputation for being healthy, so “we believe we should support the canola industry overall.”
But Unger said canola’s price will still float on a worldwide tide that is set by the big oilseeds, palm and soybean.
“It is very obvious … that there are many more factors affecting the price than simply the supply of canola alone,” said Unger.
