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Canada’s Canola Inventories to Fall to Lowest in 18 Years

As seeding area is falling below initial expectations, Canada’s canola stocks are forecast to fall by almost half to their lowest level in 18 years, according to Canada’s farm ministry, AAFC.

Domestic canola inventories for the end of the 2015/16 season have been cut by the ministry to 500,000 tons – the lowest point since the end of the 1997/98 season, a time when the country was producing less than half the canola it does today.

The AAFC had initially estimated Canadian canola sowing to increase to 8.23 million hectares, but has since downgraded its estimate to 7.86 million hectares based on disease concerns, tight rotations, and farmer shifts to alternative crops offering higher returns, and to be more in line with official forecasts from Statistics Canada.

If assuming an average yield, this area planted would lead to a canola harvest of 14.93 million tons – down 630,000 tons from last year and significantly below the record 17.97 million ton crop of 2013.

Exports are forecast to be 8 million tons – a 400,000 ton decline from the previous AAFC estimate due to a combination of tight domestic supplies and high global oilseed stocks. However, despite this reduction and a concurrent reduction for the domestic crush as well, domestic inventories will likely remain low.

Some industry observers believe that canola sowing will prove to be higher than the Statistics Canada estimate as an early spring has benefited planting, causing seeding to be ahead of normal after a warmer than usual winter with lower than usual snow cover. However, persistent dryness in many growing regions is causing concern over good crop emergence. Areas of Alberta and Saskatchewan, the country’s two biggest growing regions, have seen less than 40% of normal rainfall this growing season.

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