Canada Markets

On March 31, the U.S. Energy Information Administration released monthly data for January showing canola oil used as a feedstock in biofuel production at 242 million pounds, or 109,769 metric tons. This is the sixth monthly increase in the past nine months, up 278% from January 2022 and up 42.4% from the previous month, or December 2022.

Note the attached chart is not showing data for February and March of 2022, with estimates withheld by the EIA in order to "avoid disclosure of individual company data."

As a percentage of total vegetable oils used in U.S. biofuels, canola oil made up 16.4% of total vegetable oils used in January (brown line against the secondary vertical axis), which also included 19.6% of corn oil and 64% soybean oil. It is interesting to note that the monthly volume of soybean oil used has increased by 150 million pounds, or 68,039 mt, from the month of January 2022 to January 2023, while soybean oil's share of the total vegetable oils used has fallen from 71.6% to 64%.

According to the University of Illinois farmdocDaily, we may be in the first inning or early stages of this growth story. Renewable diesel production has been reported at 2.6 billion gallons in 2022, up 1 billion gallons from the previous year, while has averaged a 0.44 billion gallon increase annually during the past five years.

Projections show an expected increase of 1.5 billion gallons or 57.7% from 2022 to 2023 to 4.1 billion gallons, along with a 1.4-billion gallon or 34% increase in 2024. A 0.5-billion-gallon increase is forecast for 2024, for a three-year average annual increase of 1.1 billion gallons. A further 1.4 billion gallons is also expected beyond 2025.

At the same time, this study indicates the continued expansion of capacity will be tied to policy and market conditions. As stated by the farmdocDAILY, "If policy incentives and/or market conditions do not turn out to be as positive as forecast, renewable diesel projects can be canceled or mothballed, plants can operate below name-plate capacity, the mix of products can be changed (e.g., more sustainable aviation fuel and less renewable diesel), or some plants can even be converted back to refining crude oil."

It is also interesting to note that the USDA's March 31 Prospective Plantings report shows estimated U.S. planted acres of canola at 2.270 million acres, a record area that is up by a modest 2.6% from 2022.

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

Follow him on Twitter @Cliff Jamieson

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