Canada is forecast to see reduced canola planted area and rising ending stocks in 2019-20 on expectations of continued turbulence in global oilseed trade, according to a May 21 Global Agricultural Information Network report from the U.S. Department of Agriculture (USDA).
Earlier this spring, China canceled the license to export canola of two of Canada’s largest grain companies — Richardson International and Viterra — ostensibly due to grain inspection issues, although most observers say the dispute is rooted in politics.
With Canada’s two largest shippers sidelined early in 2019, exports to China from January to the end of March 2019 dropped to 630,000 tonnes, half of the three-year average for the same period, according to the USDA.
The USDA projects 2018-19 exports to fall to 9.75 million tonnes, 800,000 lower than originally projected in March 2019. Consequently, it also has adjusted projected 2018-19 ending stocks to 3.5 million tonnes, nearly 1 million tonnes higher than the projection two months earlier.
The USDA noted that Canada’s ability to increase domestic supply is limited by the number of crushing and refining plants in Canada as well as the current operating capacity, estimated to be currently near the maximum possible level.
“With no new plants expected to come online in the next 12 months, it does not appear that Canadian crushers would be able to increase crushing to utilize larger available volumes of Canadian canola seed in 2018-19 or 2019-20,” the USDA said. “There does not appear to be room for Canadian crushing facilities to absorb the additional canola stored on farms.”
