Relief is spreading through the canola crushing community, suggesting there may be more hunger for canola this winter than last winter.
Crushers spent the last year dieting, unable to consume all of a large but frost damaged crop.
Canadian Oilseed Processors Association executive director Robert Broeska noted that the substantial year end carry out of 1.7 million tonnes indicates that supply was not the problem.
“There was no real push to work that carryover down because it was low quality and it was very difficult to get a good margin on that crop,” he said.
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“It’s very expensive to bleach the colour out and get the impurities out that the end users just don’t want to have in their product.”
Last autumn’s canola crop was the largest since 1999, but the widespread frost in Alberta and Saskatchewan produced mountains of seed with high chlorophyll counts. Freezing the seed stops the withdrawal and breakdown of chlorophyll, leaving a distinct green tinge to the oil.
Chlorophyll is not dangerous nor does it affect the eating or cooking quality of the oil, but most marketers believe the green tint is unappealing to consumers and so demand that it is removed before they will stock the product.
Broeska said reports of large and high quality crops across much of the Prairies this year is encouraging to the crushers, who will probably run their plants at much closer to maximum capacity this season. They can finally see a profit from crushing canola.
“A short crop tends to squeeze crush margins and limit the ability of the industry to penetrate new markets and also to make a return on existing markets,” said Broeska.
“A plentiful crop gives them flexibility for both processing and pricing and positioning across the year.
“Everyone’s fairly optimistic.”
Canola crushed in Canada is consumed by domestic food processors and exported to the United States and offshore.
Some analysts expect low canola seed prices will prompt farmers to keep their crop in the bin hoping to pressure prices higher.
But many analysts think the low prices will draw new attention to canola from overseas vegetable oil buyers, who have spurned it in recent times because of its perceived premium price.
For canola growers, the challenge this winter won’t be lack of demand, but in getting a good price for the crop, industry sources say.
