Two reports from the USDA, which include the USDA Foreign Agricultural Service EU-28 Oilseeds and Products Annual, as well as this week's April Oilseeds: World Markets and Trade report, show tightening rapeseed fundamentals for the European Union while mentioning an increased opportunity for Canadian exports.
Despite being the largest global producer of rapeseed, E.U. production continues to fall short of meeting domestic needs, with 90% of imports traditionally coming from Australia and Ukraine to meet the shortfall. The Foreign Service attache report estimates that planted acres will be slightly higher in 2016/17, while total supply will be lower than the current year given a smaller carry-in from the current crop year, as well as lower imports of 2.3 mmt, down 17.9% from the current crop year.
The trend in ending stocks as a percentage of annual use will be one to watch, as indicated by the downward-sloping black line, measured as a percentage on the secondary vertical axis on the right. This ratio is expected to fall from 7.6% in 2013/14 to an estimated 4.9% in the current crop year, while the Foreign Service forecast for 2016/17 suggests 2016/17 ending stocks of 767,000 metric tons will represent just 3.1% of annual use. While the winter crop is reported to be in good shape, it is April and May weather that will determine the quality and quantity of the crop. USDA forecasts for this crop do not allow much room for something to go wrong.
The USDA also points to Canada's potential to boost exports to the EU. Statistics Canada's Exports of grains by final destination which was released today shows a total of 328,500 metric tons of canola exported to Western Europe in the August through February period, which compares to a total 2014/15 volume of 76,500 mt and a five-year average of annual exports at 141,822 mt.
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