As of late August, Canadian canola production estimates vary.
“The latest estimate from Agriculture and Agri-Food Canada released August 22 is for an 18.4 million tonne crop, based on average yields,” says Neil Blue, provincial crops market analyst with Alberta Agriculture, Forestry and Rural Economic Development. “Other government and private market analysts are projecting a crop of between 19 and 19.9 million tonnes.”
Weather conditions have been much better than last year, but certainly not perfect. The spring was cool and dry in much of the Western Prairies, and cool and wet in the Eastern Prairies. Parts of Alberta were overly dry for most of the season, and that led to some production losses.
In most of Manitoba, canola crops are late, were hampered by overly wet soils, and are subject to frost damage. However, the hot August weather is pushing maturity along and harvest will soon become general.
What about market prospects? Canola carryover into this crop year was low. At the end of July, the Canadian Grain Commission reported that 566,000 tonnes of canola were in commercial storage. There was also some canola left on farms, either committed for delivery or just being stored.
Therefore, the canola carryover, although implying that the 2021 production was higher than earlier estimates, was likely under one million tonnes. That equates to less than one month’s usage and compares to the record carryover 3 years ago of over 4.4 million tonnes.
“Canola has well developed markets, both for seed exports and products of our domestic crushing industry,” points out Blue. “With the renewed supply, it is likely that domestic canola crushing will approach or exceed the record 10.4 million tonnes of the 2020-21 crop year.”
Although a repeat large Australian crop could provide more competition to Canadian exports, Canada’s 2022-23 canola exports could rebound to 9 million tonnes, which is only the 5-year average level. Even with a 20 million tonne crop, those canola usage numbers would result in another year of tight ending stocks.
“There are many factors that affect canola prices. Although canola prices have dropped from spring highs, they are still historically high. Input costs have risen, but with average yields, the potential margins are still very profitable,” says Blue.
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