Canada Expects 18% Drop in Canola Exports
Canada expects to see an 18% drop in canola exports for the 2015/16 season despite a significant upward revision for the country’s harvest, as buyers are turning to cheaper palm and soybean oils.
The Canadian government raised its estimate for canola output in its October projections by seven percent over its previous estimate released in September due to improved moisture conditions in Saskatchewan and Alberta. Production is now forecast to reach 14.3 million tons – although higher than previous thought, the crop will still be 13% smaller year in year because of a decrease in harvested acreage, and yields that are nine percent lower than last year and five percent below the five year average at 1.8 tons per hectare.
Canola exports are expected to fall from 9.15 million tons last season to only 7.5 million tons as Canadian sellers face record global soybean inventories and high palm output. However, Canada’s weakening dollar, which fell by 20% against the U.S. dollar this past year, and concerns that El Niño will affect palm output in Indonesia are boost Canadian sales prospects to a degree.
Canadian canola crush rates are holding steady with last year’s volumes, but low vegetable oil and protein meal prices are expected to cut into the country’s crush margins. End-of-year carryout stocks are set to fall 26% year on year to 1.7 million tons – an even more dramatic decline than from three million tons in 2013/14.