Can canola captivate – global canola production forecast

The global canola season of 2022/23 is soon coming to an end. As global production rose by 18 per cent from the previous year to a massive record level, and global ending stocks are expected to recover further, providing a bit of a buffer for any potential yield issues.

RaboResearch general manager Australia and New Zealand Stefan Vogel said farmers had to watch canola prices slide dramatically from last year’s highs. “But the ICE canola contract showed signs of recovery in the first half of June, and we’ll take a look at the fundamentals for the new season to evaluate if that’s for good reason,” he said.

Mr Vogel said global canola production is forecast to fall slightly short of last year’s record, but not by much. “The expected reductions from Australia’s record crop last season will be largely offset by higher production in the EU and Canada. But with the available inventories, the supply is even stronger than last season.”

“Canada – the world’s largest exporter – is finishing canola planting and farmers are marginally increasing area,” he said. “For now, the crop forecast developed by local authorities is based on trend yields and that might be a bit optimistic given that about half of the crop area – especially in the western parts of the country – are facing dry seasonal conditions.” But it’s early days, Mr Vogel said, and if all goes as planned, Canada might harvest over 20 million tonnes of canola, a seven per cent increase from last year and their best crop in five years. “This would allow Canada to export slightly more canola than last season, but still well below the levels seen from 2015 to 2020.”

Mr Vogel said Canada’s statistics office admits that the assumption for domestic processing does not yet include any of the four new Canadian canola processing plants being operational. “And for every plant that starts up during the season, 0.5 to one million tonnes of additional canola could be used. In summary, with dry conditions, low inventories and a potential to see stronger domestic use, the world’s leading exporter might show some price-supportive surprises in the year ahead,” he said.

The EU’s crop is forecast to rise further by about three per cent from last year, even so the 2022 crop already was the best in five years, Mr Vogel noted. “The EU is the world’s leading importer and the better the local crop, the lower the import needs. The two major canola-producing countries in the EU – France and Germany – both expanded their area. Crops will soon be ready for harvest. Both countries have been dry, but not to the extent that would cut the EU’s production dramatically.”

“Ukraine and Russia are both expected to produce similar volumes to last year’s excellent canola crop,” Mr Vogel said. “Ukraine’s canola will soon be ready for harvest, and it is largely grown in the western half of the country, away from the frontlines and the recently destroyed dam. Therefore, it is unlikely that the Ukrainian production will decline much from the forecast volumes.”

But can Ukraine export canola and grains out of the country through their ports will be the question as the negotiations about the renewal of the grain deal are slow and cumbersome, Mr Vogel said. “Russia is putting lots of pressure on the West to lift sanctions and threatens to not extend the deal.”

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