Canola usage remains strong

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Source: Government of Alberta

“The price of canola has fallen substantially during the last few months, possibly giving the impression that canola demand has faltered,” says Neil Blue, crop market analyst with the Alberta government. “But that’s not so, according to statistics provided by the Canadian Grain Commission (CGC).”

According to the early June issue of Grain Statistics Weekly from the CGC, from the beginning of this crop year August 1, 2022 up to this June 4, there have been 7.32 million tonnes of canola exported and 8.66 million tonnes of canola crushed. In addition, there would have been some unrecorded off-grade canola used in the feed industry. So, at week 44 of 52 of this crop year, about 16 million tonnes of canola have been used. The pace of canola usage has averaged 363,000 tonnes per week.

Last December, Statistics Canada had estimated the 2022 Canadian canola production at 18.174 million tonnes and carryover canola from last crop year at 865,000 tonnes. If Canada imports an estimated 100,000 tonnes, the estimated total canola supply this crop year is 19.14 million tonnes. If 16 million tonnes of canola are already used, that implies remaining canola inventory of about 3.1 million tonnes available until the 2023 canola crop becomes available. If the weekly average canola usage pace slowed for the balance of this crop year to 300,000 tonnes, the additional usage would be 2.4 million tonnes. That would leave about 700,000 tonnes of canola remaining July 31 until new crop canola harvest.

“To put that into perspective,” states Blue, “crop carryover is often compared to annual usage of a crop. If canola carryover on July 31 is near 700,000 tonnes and annual usage for this crop year totals 18.4 million tonnes, the stocks to usage ratio of 0.70000 million/18.4 million, expressed as a percentage, is 3.8%. One month of crop supply is about 8.3% (100/12 months), implying less than 2 weeks supply until canola harvest begins.”

2022 canola production of 18.174 million tonnes is possibly underestimated. Some agencies and analysts estimate Canadian 2022 canola production near 19 million tonnes. “Even if that higher production is later confirmed,” concludes Blue, “a recalculated stocks to use ratio (1.52 million/18.4 million, or 8.3%) would still be tight at just a one-month canola supply carryover.”