Canada’s Canola Exports to be Hardest Hit by Drought

Due to hot, dry weather across the Western Canadian prairies, the Agriculture and Agri-Food Canada (AAFC) farm ministry has cut its 2015 estimates for Canada’s grain and oilseed production by 4.5 million tons. Included in these cuts is a 625,000 ton reduction in canola output, which brings the country’s expected canola harvest to a three-year low of 14.3 million tons, and 1.26 million tons below last year.

However, experts warn that these difficult conditions and lower output are expected to more significantly affect Canada’s canola export volumes than they will the country’s supply for domestic use. Growing conditions across the Eastern Prairies are markedly better than in the west, and even though yield prospects remain uncertain, reports indicate that scattered rain and good soil moisture are mitigating the negative effects of drought in areas that historically supply canola to the domestic market.

The AAFC has reduced its projection for 2015/16 canola exports by 1.6 million tons year on year to 7.6 million tons, the lowest volume in three seasons. However, domestic canola usage is predicted to be 7.2 million tons – on par with last year’s numbers.

Canadian ending canola stocks for the 2015/16 season are expected to be a “very tight” 500,000 tons, which the ministry expects will play its part in seeing canola prices climb by C$60 per tons to C$510 – C$550 per ton.