Strong EU canola demand expected

European Union canola demand should be robust this year, according to an Australian analyst.

That is due in part to a poor domestic harvest, Dennis Voznesenski, agricultural economist with the Commonwealth Bank of Australia, said in a recent weekly alert and podcast.

He noted that Oil World has dropped its 2024 EU canola production forecast to 17.6 million tonnes, down from 20 million tonnes last year.

“Yield forecasts continue to be cut in France and Germany, where crops were inundated with rain,” said Voznesenski.

The European Commission is forecasting an average EU rapeseed/canola yield of 17.85 bushels per acre, which would be two per cent below the five-year average.

Excess water in a large part of the Netherlands, western and southern Germany, northern Italy and central-eastern France is causing problems.

“Winter crops in those regions have been suffering since the start of the season from waterlogging, associated pest and disease pressures and difficulties faced by farmers in conducting field operations,” the EC said in its recent JRC MARS Bulletin.

The EC is forecasting 18.38 million tonnes of production, down from 19.72 million tonnes last year.

Oil World is also reporting problems with the Black Sea crop.

“Detrimental weather conditions in recent weeks threaten to curb world supplies of sunflower oil and rapeseed oil sizably below expectations,” the firm stated on its website.

“The looming reductions in supplies of sunflower oil and rapeseed oil can be compensated only partly by soya oil.”

Canada’s crop is suffering as well.

The percentage of canola in good to excellent condition in Alberta fell to 48.6 per cent as of July 23, down from 71.8 per cent the previous week.

Topsoil moisture in Saskatchewan was rated 50 per cent short to very short as of July 22 due to a prolonged stretch of persistent high temperatures and insignificant rainfall.

“Canola is especially sensitive to heat blasting while flowering, and producers are concerned about how their crops will fair during this period,” Saskatchewan Agriculture stated in its weekly crop report for the July 16-22 period.

Canola also received a potential demand boost from the EC’s recent announcement that it will be applying provisional anti-dumping duties against imported Chinese biodiesel and renewable diesel.
The duties will be implemented starting Aug. 16.

“Today we obtained measures that will start to rebalance the scales,” European Biodiesel Board (EBB) president Dickon Posnett said in a July 19 press release.

“Our European businesses have been suffering for far too long under the pressure of unfairly priced Chinese imports, and we are very happy to see the European Commission take action.”

Fastmarkets reports that 39 Chinese biodiesel exporters would be subject to a 36.4 per cent provisional anti-dumping duty, with another three subject to penalties ranging from 12.8 to 36.4 per cent.
Companies that co-operated with the EC’s investigation will face a 23.7 per cent duty.

The EBB was dismayed that Chinese sustainable aviation fuel was excluded from the provisional measures.

Voznesenski said the new anti-dumping duties are good news for canola exporters such as Australia and Canada.

China exported 1.8 million tonnes of biodiesel to the EU in 2023, accounting for 10 per cent of total use that year, according to EBB.

“The reduction in Chinese imports will mean European biodiesel production should rebound and increase demand for canola as a feedstock,” said Voznesenski.

That should support canola import demand and prices since canola is the primary feedstock used by the EU’s biodiesel/renewable diesel manufacturers.

He said the EC’s next step could be a tariff on Chinese used cooking oil imports, which would also support canola demand and prices.

Tags: China, canola, Canada, European Union, Production, biodiesel, crop, forecast, demand