Canada Markets

The Canola Council of Canada had a target to reach 15 million metric tonnes of production and demand by 2015. This was shattered by Canada reaching 18 mmt this crop year. Now, goals might be changing.

The Canola Council issued a media advisory Monday to announce a Thursday press conference in Winnipeg to announce "bold new targets" for the upcoming decade.

According to the International Grain Council's December release of its five-year global supply and demand projections report through to the 2018/19 crop year, prospects remain favorable for canola: Canada was looked at to produce, crush and export increased volumes.

The report itself cautions that it does not provide a specific forecast supply and demand forecast and is to be used more as an indicator of trends or "developments" in the global markets, given a set of assumptions. One shortcoming is the fact that 2013/14 forecasts are derived from October data, which misses sharp increases in production for 2013/14 as reported by Statistics Canada in early December.

Global data for oilseeds, which include only soybeans and canola, indicate a slowing in the growth of both production and consumption as compared to the prior five years. Production is forecast to grow by 2.1% per year on average in the next five years to 387 mmt, as compared to the average growth rate of 5.4% per year in the previous five years. Consumption is estimated to grow by an average of 2.3% per year, as compared to the average 4.9% annual growth rate in the five years prior. While global stocks are set to grow, the stocks/use ratio is forecast to grow only 2%, from 10% in 2013/14 to 12% in 2018/19, leaving global supplies precariously tight and highly susceptible to supply shocks.

Global rapeseed/canola production is estimated to grow at an average annual rate of 2.4% to 75 mmt in 2018/19, which is below the 3.2% average growth rate reported for the previous five years. Consumption is forecast to also grow to 75 mmt, which reflects an average annual growth rate of 2.6% as compared to the 3.8% average annual increase in the past five years. Global stocks/use is forecast to remain virtually unchanged, increasing from 9.2% in 2013/14 to 9.3% in 2018/19.

From a Canadian perspective, global trade in canola/rapeseed is expected to increase 21% between 2013/14 and 2018/19 to 15.8 mmt. Canada's total export potential is forecast to grow 12% to 9.2 mmt by 2018/19, or 1 mmt above the current 2013/14 target.

Canada and Australia are expected to supply roughly 80% of the world trade, while the only other significant growth in export potential is seen in the Ukraine, where exports are expected to grow from this year's 1.7 mmt to 2.4 mmt in 2018/19. Domestic crush is expected to increase to 8.4 mmt in Canada over the five years, or 1.2 mmt above the current Canadian target for 2013/14.

The ICG pegged Canada's 2018/19 production target at 17.9 mmt, from an area of 21 million acres. Of course, current AAFC data based on December's Statistics Canada data has currently estimated Canada to have achieved that production in the current year on fewer acres.

Current challenges in the industry include the logistical issues faced in getting product to market along with keeping rotations in check to prevent disease. It will be interesting to see how the Canola Council views the Canadian potential as we move forward.

Cliff Jamieson can be reached at cliff.jamieson@dtn.com

(ES)

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