March 18, 2013

 

 

Canada's rapeseed exports, a key source of vegetable oil, have declined significantly due to the costliness of the crop for importers after a weak harvest.

 

Canada, the biggest exporter of rapeseed, has shipped about 4.7 million tonnes of the crop in 2012/13 through March 3, a drop of 17% from a year ago, according to the Canadian Grain Commission.

 

The oilseed is crushed mainly to produce vegetable oil.

 

"When you look at the price of (vegetable oil) substitutes around the world, I'm surprised people would buy any Canadian (canola) seed," said Tony Tryhuk, manager of commodity trading at RBC Dominion Securities. "The price-sensitive demand I think would go elsewhere. When you look at competing markets, we are expensive relative to them."

 

ICE Futures Canada nearby canola futures have gained nearly 6% so far this year after a 14.5% advance in 2012. Chicago soy are up just over 2% so far this year, compared with gains for Paris rapeseed and Malaysian palm oil in 2013.

 

China, Japan and Mexico were the biggest importers of Canadian rapeseed in 2011-12.

 

Rapeseed's price is high due, partly, to scarcity in supplies, after a weaker Canadian harvest last year.

 

"I think we're going to run out of seed in May," said Paul Erickson, senior trader in Canada with GrainCorp. By then, exports will virtually stop, he said, unless last year's crop was larger than the 13.3 million tonnes which Statistics Canada estimated.

 

Analyst Don Roberts of Canolainsight.com estimates the actual size of last year's harvest at about 600,000 tonnes larger than what StatsCan reported.

 

If not for rainy weather at Port Metro Vancouver, Canada's busiest port, rapeseed exports wouldn't be quite so far behind, he said.

 

"I think there's been a huge logistical problem out here on the West Coast," said Roberts.

 

Global palm oil exports are forecast to hit a record high in 2012-13, according to the USDA. However, the organisation forecasts US soy stocks to be the lowest in nine years at the end of the current crop year on August 31.

 

Canadian rapeseed exporters include Cargill, Richardson International and Viterra.

 

Importers that can afford to wait for new rapeseed supplies will likely do so, Tryhuk said. Canadian farmers are expected to plant 21.3 million acres of rapeseed this spring, for harvest starting in August, according to Agriculture and Agri-Food Canada.

 

There are lesser rapeseed exports due to an increased amount being crushed in Canada for the production of vegetable oil and meal for animal feed.

 

Despite last year's smaller harvest, Canadian crushers have processed 6% more rapeseed through March 6 compared to the previous year's record pace.