February 20, 2008

 

Premiums for hybrid rapeseed narrows but acreage still growing in Canada

 

 

Canadian farmers will plant more hybrid rapeseed in 2008-09 (August-July) but premiums over that of regular rapeseed is narrowing as the latter trades at record prices, market watchers said.

 

Of the 14.7 million acres Canadian farmers planted with rapeseed in 2007-08, roughly 10 percent-15 percent were of the high oleic varieties, also called high stability or omega-9 varieties, said Chris Anderson, vice president of crop production at the Rapeseed Council of Canada.

 

The oil from the hybrid crops is used in restaurant and food production applications as a healthier alternative to trans-fat laden partially hydrogenated oils." Anderson said, adding that "It's definitely a growing segment."

 

Anderson expects to see further increases in hybrid rapeseed acres in 2008, as the dramatic growth in demand "is translating into an increased pull for acres for supply."

 

However, in order to get those acres, the companies will need to make growing the crop worthwhile for producers, he added.

 

James Loewen, grains manager of Bunge Canada's Rapeseed crusher in Altona, Manitoba, said he expected Nexera rapeseed would account for up to 50 percent of the rapeseed crushed at his plant in 2008-09, as the segment has seen steady growth in recent years. He believes a number of western Canadian crushing plants would see similar amounts of their production devoted to high oleic varieties.

 

Loewen said his plant offered a premium for contracted Nexera rapeseed of CAN$50 (US$49.3 ) above the price of commodity rapeseed. The company will also pay the cost of freight, which would work out to a total premium of roughly CAN$60 (US$59.1) per tonne. He said contracts from other buyers were in a similar range.

 

Farmers growing hybrid rapeseed need the extra money to cover the higher costs of growing the identity preserved crop, such as increased storage costs and lower yields, said Loewen.

 

"We're pushing to have more acres out there," said Loewen. But with commodity rapeseed trading at record highs, the premiums for high oleic varieties may not look as attractive to growers as they once did by comparison, he noted.