The Canadian crop is being used up at a record pace, and something will have to happen to slow its consumption
Will Canada run out of canola this year?
The answer is obviously no because the market will not allow supplies to run out.
Exports and crush data indicate that canola is being used up at a record pace, and something will have to happen to slow the consumption of canola. This is in stark contrast to the 2023-24 marketing year, when domestic canola use was strong but export sales, especially to countries outside of China, were weak.
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Compounding the situation is the fact that the canola crop estimate is likely to be revised lower by Statistics Canada when it reports its final estimates on Dec. 5.
The current production estimate stands at 18.9 million tonnes, but lower yields are likely to push production down by 0.5 to one million tonnes. This will certainly tighten the canola supply and demand situation on the Prairies.
September canola crush statistics indicated that a record 933,065 tonnes were processed during September, which brought the canola crush for the crop year to 1.78 million tonnes. Canola crush in Canada is poised to eclipse the 11 million tonne record that was set last year. With crush already 324,760 tonnes higher than last year, Canadian canola crush will likely end up north of 12 million tonnes.
Recent data from the Canadian Grain Commission (week 13) put total crop year canola exports at 3.1 million tonnes, which is the fastest pace since the 2020-21 crop year. In 2020-21, exports totalled 10.6 million tonnes, which is close to three million tonnes higher than the forecasts for 2024-25.
Export sales need to slow quickly to ration demand.
There will be some competition from Australia in the coming months as its harvest advances and supplies for export become available. Prices for canola need to push higher to ration demand.
Currently, ICE canola nearby futures are trading at a significant discount to European rapeseed futures. For the March 2025 contract, the discount stands at more than $125 per tonne. This indicates that Canadian canola is still very competitive in the global marketplace.
Prices are starting to climb in both the cash and futures markets in Western Canada with the nearby January contract hitting the highest levels since last July. The problem is that prices will need to move higher or competing oilseeds move lower to ration canola use.
The market needs to wake up quickly or we will end up with minimal canola stocks when the crop year ends in July.
