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Canada's 2022-23 Canola production pegged higher by 42.57% y/y to 17.95 million tonnes

21 May 2022 2:43 pm
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NEW DELHI, May 21 (Commoditiescontrol) - Canada's 2022-23 canola production is pegged higher by 42.57 percent from 12.59 million tonnes (Mt) in 2021-22 to 17.95 million tonnes, according to AAFC’s latest outlook report, published on May 20.

For 2021-22, canola supplies tightened up significantly from than last year, declining 37% to 14.5 million tonnes (Mt), due to a 49% drop in carry-in stocks and 35% lower production as a result of last summer’s drought.

Demand for Canadian canola remains firm on a strong world oilseed crush and high prices for competing oilseeds, vegetable oils and protein meals. Disruption of Black Sea exports of sunflowerseed oil as a result of the Russian invasion of Ukraine is tightening world supplies and supporting world prices.

Domestically, processing of canola is estimated to fall to 8.3 Mt, a drop of 20% from last year, while exports are expected to fall by 51% to 5.2 Mt, as commercial buyers outbid exporters for the tight supplies.

For the crop year, the major importers of Canadian canola to-date are China, Japan, Mexico and the European Union.

Carry-out stocks are forecast to fall by 77% from last year, to a tight 0.40 Mt, for a stock-to-use ratio of 3% versus 8% in 2020-21 and the 5-year average of 13%.

Price volatility for canola increased sharply during the past month due to shipping disruptions from the Black Sea Region. For the crop year to date, Canadian canola prices are estimated at $1,100/t vs $730/t last year and the 5-year average of $556/t.

For 2022-23, the area seeded to canola is expected to decrease by 7% to 8.5 million hectares (Mha) based on Statistics Canada’s Seeding Intentions Survey, as farmers shift into lower risk crops following last summer’s drought. Harvested area is forecast at 8.4 Mha while yields are forecast at 2.14 t/ha versus the 1.4 t/ha achieved last year. Western Canadian canola yields will be largely determined by moisture; current weather maps show above normal soil moisture in Manitoba, normal in Saskatchewan and below normal across a large portion of Alberta. Generally, soil conditions are moister across the key canola-growing northern half of the Prairies and drier across the southern half.

Production is forecast to rise to the 8th highest level on record of 17.9 Mt. By province, Saskatchewan is forecast to grow 9.4 Mt of canola, Alberta 5.4 Mt and Manitoba 3.0 Mt for the upcoming crop year. Total supply is forecast to rise sharply from last year to 18.4 Mt as the increase in production is moderated by a very tight carry-in of stocks.

Following the rebound in domestic supplies, usage of Canadian canola is forecast to recover with exports up by about 71% to 8.8 Mt while domestic crush is expected to rise to 9.0 Mt from 8.3 Mt last year. Carry-out stocks are forecast to rise by 25% to a still very tight 0.5 Mt for a stocks-to-use ratio of 3%. Canola prices are forecast to decline to $1000/t track Vancouver, a drop of about 10% from the record highs in 2021-22. If realized, this would be the second highest canola price on record.

The 2022-23 outlook remains sensitive to several key factors, including the unfolding situation in Ukraine. The second factor is the anticipated rate of growth in the renewable diesel sector as the world seeks to reduce its dependence on mineral oils in response to high crude oil prices and to combat climate change. The third factor is the expected world production of alternate oilseed crops - this outlook assumes a minimal shift in seeded area for most oilseed crops, normal temperatures and moisture across most growing regions, and normal yields for most crops. 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 and can affect the canola market either positively or negatively. Policy shifts in Indonesia as that country seeks to restrict palm oil exports in an effort to suppress domestic prices is adding another source of uncertainty into world oilseed markets.

(By Commoditiescontrol Bureau)

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