Diminished canola yields: Statistics Canada's estimate raises production concerns
Statistics Canada's July report highlights a substantial decline in canola production attributed to poor yields. An expected 8.8% reduction in yields to 35.4 bushels per acre is projected across Canada, resulting in an estimated canola production drop to 17.6 million metric tonnes. This decline is significant compared to the prior estimate of 18.8 million metric tonnes released last week provided in the outlook for principal field crops, also disclosed by Statistics Canada.
The root cause of these lowered production estimates, as reported by Statistics Canada, lies in the persistently subpar crop conditions across key growing regions. Alberta's provincial reports indicate that only 43.1% of the total crop was rated as being in good to excellent condition by the end of July, notably below the five-year average of 60.2%. Dry conditions remain a concern in Saskatchewan, particularly in the southwest and west-central regions. In contrast, reports from Manitoba suggest that crop conditions in the province remain generally favourable.
Transitioning to Eastern Canada, regions encompassing Ontario, Quebec, and the Atlantic provinces have witnessed above-average rainfall since the start of the growing season. Furthermore, according to Statistics Canada’s data, temperatures during the last month of the growing season have slightly exceeded the norm.
Recognising the adjusted production estimates, which market players have interpreted as "a move in the right direction," it is imperative to underscore the marked divergence between market projections and Statistics Canada's current estimate. Market players have shared a production range of 14 to 16 million metric tonnes with Mintec, notably deviating from the figures reported by Statistics Canada. Furthermore, market players who have offered insights to Mintec voice concerns about the possibility of further deteriorating conditions. These concerns are particularly pronounced due to the anticipation of minimal rainfall in the next couple of weeks over the crucial rapeseed growing areas mentioned earlier.
In general, industry participants lean towards the perspective that the 17.7 million metric tonnes estimated by Statistics Canada merely grazes the surface of the underlying issue. This collective viewpoint hints at the potential for additional downward revisions in the forthcoming months, potentially driving actual production volumes closer to the 15 million metric tonne threshold. If this scenario comes to fruition, there is a possibility that Canada might reduce its canola exports, resorting instead to internal crushing and sales to the US market, particularly for biodiesel. Such a move could mitigate the influx of canola in the open market, potentially curbing some of the anticipation of an overwhelming rapeseed supply that might outstrip demand.
