Australian canola a ‘thorn in our side’

Canada is facing stiff competition from Australia in many canola export markets.

“They’re here to stay,” Jarrett Beatty, an exporter with Parrish & Heimbecker, said during the Canola Council of Canada’s Canola Utilization Forum.

“Unless they have an environmental issue, they’re going to continue to be a bit of a thorn in our side in terms of capturing market share.”

The country is expected to export 4.4 million tonnes of the commodity this year, down from 5.87 million tonnes last year and 5.91 million tonnes the year before that.

Those figures are about double the volume it used to ship out annually.

Beatty said Australian canola is selling at a $50 to $60 per tonne discount in markets such as Mexico and Japan.

The discount was as high as $100 per tonne last year when Australian growers harvested an eye-popping 8.27 million tonnes of the crop.

“The fact that Japan took any seed from Canada (that year) is a testament to their loyalty and their love of our product,” he said.

However, there is one market where Canada still rules due to a phytosanitary constraint.

“We have been more competitive in China because of their dockage regulations of one percent and Australia’s inability to meet those regulations,” said Beatty.

Canadian exporters have long complained about having to clean to one per cent dockage to access the Chinese market.

“It has actually ironically given us a great advantage into China,” he said.

Australia does not typically clean its canola because its dockage off the combine is lower than Canada’s. They would have to invest in port cleaning facilities to access the Chinese market.

Beatty is forecasting China will buy 4.07 million tonnes of Canadian canola in 2023-24, which would be 61 per cent of total sales for the year.

Meanwhile, exports to other markets such as Japan, Mexico, United Arab Emirates, Pakistan, the United States and the European Union are well below normal volumes.

“We are not competitive on prices (versus) Australia into those marketplaces,” he said.

Poor export performance is why the trade believes Canada’s ending stocks will be 3.74 million tonnes, which is almost double the two million tonnes Agriculture Canada is forecasting.

“We started off slow this year,” said Beatty.

“Growers were slow to engage as the prices were coming down and China was slow to ramp up. And again, we had this major pressure from Australia.”

The good news is domestic crushers are usurping more canola, consuming an estimated 10.93 million tonnes of the crop in 2023-24 compared to 6.67 million tonnes of exports.

Beatty said Richardson International’s new plant in Yorkton was recently commissioned and is now busy processing canola. Cargill’s plant will be opening in 2025 and the Louis Dreyfus plant will follow in 2026.

Current and proposed renewable diesel plants. If all seven facilities are built it would result in four billion litres of annual production capacity. | Source: Canola Council of Canada

Each of those facilities is capable of consuming 1.12 million tonnes of the oilseed annually, so crush volumes are set to spike in the next couple of years.

Jeff Pleskach, a trader with Cargill, said that is going to drive down Canada’s seed exports in the coming years, while canola meal exports will rise.

China will be the target market for what is expected to be about three million tonnes of additional Canadian canola meal production.

The country has a rapidly expanding aquaculture industry and canola meal has been underused in its dairy sector, he said.

Also, there is expected to be decreased canola crush in China as that capacity relocates to Canada, which means there will be a void that needs to be filled.

Canola meal sales into the United States will be facing stiff competition from expanded soymeal production in that country, at least in hog and poultry rations.

Beatty was asked how Australia’s canola stacks up to Canadian canola on oil content.

He said it is typically higher, in the 46 to 47 per cent range compared to 43 to 44 per cent, because it is grown as a winter crop.

That makes Australian canola even more competitive, especially in the past few years when Canada’s oil content has been lower than normal.

Curtis Rempel, vice-president of crop production and innovation with the Canola Council of Canada, said the Western Canada Canola/Rapeseed Recommending Committee sent a signal to breeders a while back that they need to increase protein content.

That has come at the cost of oil content. If the industry wants the focus to shift back to oil, they need to let breeders know.

“They can’t do it on a dime, but certainly over a five-year period they can start edging levels up,” he said.

Rempel also noted that genomics research shows it is possible to increase both oil and protein at the expense of fibre.

Rempel also provided an early glimpse into the 2024 growing season. He had a map showing that soil moisture was 40 to 85 percent of normal in a big circle surrounding Edmonton, Calgary and Saskatoon.

“Large swaths of the Prairies, especially parts of our highly productive black soil zones, are still well below normal soil moisture levels,” he said.

Another map showed that 85 per cent of the Prairies was experiencing moderate to exceptional drought as of the end of February.

The Peace River area, south-central Alberta and large chunks of Saskatchewan are in particularly bad shape.

The council is advising growers to switch some fertilizer to in-crop if they are facing moisture deficits.

They should avoid trying to chase water because research shows they can expect a 10 to 15 per cent yield reduction if they plant two centimetres or below.

Rempel said the forecast calls for high grasshopper pressure.

Growers should also be mindful of flea beetles because they tend to be active when temperatures are high and the crop is under stress.

Seed treatments might not work under those conditions, so producers may need timely applications of post-emergence insecticide.

Tags: Mexico, crop, Japan, markets, Australia, China, export, canola, Canada