In line with Mintec's previous report here, Statistics Canada projects that farmers will expand the cultivation of canola in the upcoming 2023-24 crop year, with a slight increase estimated at 8.7 million hectares (Mha). Despite the enticing prices for wheat and peas, and the previous year's decline in canola prices, farmers are determined to persist with their cropping rotations. According to Statistics Canada's production forecasts, total output is expected to reach 18.4 million tonnes (Mt), assuming average yields and normal abandonment rates. However, market players, commenting to Mintec express uncertainty regarding whether these projections will materialise due to weather issues experienced during crucial planting periods. A chilly and arid March and April were followed by an exceptionally hot May, and Mintec's weather forecasts suggest that the summer months may be hotter and drier than average. Despite these challenges, tightening existing inventories is anticipated to offset the production increase, resulting in a marginal rise in supplies, as outlined in the Statistics Canada Outlook for Principal Field Crop's report.
Canola demand is expected to remain stable, with estimates of 9.5 Mt for domestic crush and 8.8 Mt for exports. This forecast is driven by strong global demand for oilseeds, vegetable oils, and protein meals. The assumption is that the current crush plant capacity will be maintained. However, if a significant new canola processing facility becomes operational in 2023-24, domestic crush is predicted to rise to approximately 10.0 Mt, while exports may decline to around 8.3 Mt. In such a scenario, the European Union (EU) crushers may face reduced exportable supply, potentially leading to increased reliance on domestic production levels or imports from Ukraine and Australia. This could tighten global supply and demand balance sheets and exert upward price pressure.
Mintec's assessment indicates that the report aligns with market expectations before its release and, in isolation, does not suggest a strong bullish or bearish sentiment. However, with the knowledge of seeded acreage, upcoming weather conditions will play a crucial role in determining Canada's canola production and will significantly impact the movement of rapeseed markets in the coming months.
Mintec will update this story as more details emerge.