Canadian Canola Supply and Demand Estimates in View of Lower Plantings

Published 2022년 5월 6일

Canadian canola production in 2022/23 is estimated to increase after drought lay waste to production in 2021/22. However, farmers are opting for spring wheat, at the expense of canola and the rebound in canola production will not be enough to significantly replenish stocks. According to Statistics Canada’s Seeding Intentions, the area under canola could drop by 7% from last year to 8.5 million hectares. As a result, production could be the second-lowest in 7 years, at 19.4 million mt. At these production levels, canola and canola oil could remain in short supply in North America for yet another season.

Canadian Farmers to Plant Less Canola, Opt for Spring Wheat Instead

Canadian farmers plan to plant only 8.457 million hectares under canola in 2022/23, according to Statistics Canada’s Seeding Intentions Survey, released last week (April 26th). This would be a 7% drop from 2021/22 in the area under canola, despite prices being more than 20% higher than a year ago. Wheat and Canola are Canada’s largest field crops in terms of production, and farmers plan to plant more spring wheat, at the expense of canola. Farmers are expecting better returns for wheat production and prices to remain high. Demand for wheat is could remain strong, especially considering production losses in Ukraine. Read more about Canada’s wheat production prospects here.

Canola Supply Could Remain Tight throughout 2022/23

Production in MY 2021/22 fell to only 12.6 million mt, 35% less than the year before. Domestic crushings are forecast to drop to only 8.5 million mt in 2021/22, from 10.4 million mt the year before. Exports are expected to plummet to a mere 5.4 million mt from 10.6 million mt in 2021/22.

Looking forward to MY 2022/23, production is expected to rebound, but only because of the poor production in 2021/22. This could still be the second-lowest crop in 7 years, depending on growing conditions throughout the season. In the latest Outlook for Principal Field Crops by Statistics Canada, yields for 2022/23 were estimated at 2.31 mt/ha. Using the same yields and the lower area estimate, production is forecast to reach 19.4 million mt. All sides considered, canola crushers and exporters will again be scraping the bottom of the barrel at the end of the 2022/23 marketing year.

Based on the above canola estimates, canola oil production will pick up from last year. Canola oil production in 2022/23 could be 4.2 million mt, which is a significant increase from the estimated 3.6 million mt in 2021/22. Exports could also bounce back to 3.3 million mt, however, both production and exports could remain below pre-drought levels. Canola oil will remain in strong demand for at least the rest of 2022, and likely beyond, as most alternative cooking oils are facing their own woes. South America’s soybean crop fared worse than expected, the war in Ukraine has significantly impacted sunflower oil supplies and palm oil production is falling short of increased demand as the foodservice industry recovers post Covid-19. This means that canola oil will remain in high demand, even though it is typically more expensive than other vegetable oils.