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Canada's 2022-23 Canola Production Pegged higher by 60% y/y to 20.2 million tonnes

22 Jan 2022 3:21 pm
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NEW DELHI, Jan 22 (Commoditiescontrol) - Canada's 2022-23 canola production is pegged higher by 60 percent from 12.6 million tonnes (Mt) in 2021-22 to 20.2 million tonnes, according to AAFC’s latest outlook report, published on January 21.

For 2022-23, seeded area in Canada is forecast to decrease by 3% to 8.8 million hectares (Mha) as farmers shift into alternate cereal crops. Harvested area is forecast at 8.7 Mha while yields are forecast at 2.31 tonnes per hectare (t/ha) up from the 1.4 t/ha achieved in 2021-22. Production is forecast to rise by 60% to 20.2 Mt, the third highest on record.

Total supply is forecast to rise sharply to 20.9 Mt as higher output offsets the drop in carry-in.

Exports are forecast to rebound by 85% to 10.0 Mt on strong world demand and a rebuilding of domestic supplies, assuming a return to normal yields.

Domestic crush is forecast to rise by 18% to 10.0 Mt with the industry operating at near full capacity to serve the strong world demand for canola oil and canola meal. Carry-out stocks are forecast to rise by 40% to a still very tight 0.7 Mt for a stocks-to-use of 3%.

Canola prices are forecast to decline sharply, falling 33% from the record highs in 2021-22, to $800/t track Vancouver. If realized, this would be the second highest canola price on record.

The accuracy of the 2022-23 outlook is sensitive to several key factors. The first is the anticipated rate of growth in the renewable diesel sector as the world seeks to reduce its dependence on mineral oils as part of its climate change mitigation strategy. A second factor affecting the forecast will be the production of alternate oilseed crops worldwide.

The outlook currently assumes a minimal shift in seeded area for most oilseed crops, normal temperatures and moisture across most growing regions, and normal yields for most oilseeds. The outlook is also sensitive to the strength of food demand for oilseeds, particularly in China. China is the world’s largest importer of oilseeds but remains a volatile purchaser, which can have either a positive or negative impact on the canola market.

For 2021-22, canola supplies have tightened significantly from last year, declining 37% to 14.5 million tonnes (Mt), due to a 49% drop in carry-in stocks and 35% lower production following last summer’s drought-reduced production in Western Canada.

Demand for Canadian canola continues to be strong on increased world oilseed crush and high prices for oilseeds, vegetable oils and protein meal.

The combination of tight supplies and strong demand is supporting record high prices for canola as the market seeks an equilibrium.

Domestic processing of canola is estimated down by 18% from last year to 8.5 Mt, by comparison exports are expected to fall by 49%, to 5.4 Mt, due to the tight supplies and logistical issues from the temporary disruptions to rail and road access to the Port of Vancouver as a result of the severe weather event in November 2021. The major importers of Canadian canola for the crop year to date are Japan, China, Mexico and the European Union.

Carry-out stocks are forecast to fall by 72% from last year, to a tight 0.5 Mt, for a stock-to-use ratio of 4% versus 8% in 2020-21 and the 5-year average of 13%. Canola prices are estimated at $1050/t versus $730/t last year and the 5-year average of $556/t.

(By Commoditiescontrol Bureau)

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