March 25, 2008

 

Canada finds strong market for rapeseed meal

 

 

Demand for Canadian rapeseed meal remains strong, despite the fact that there is more of the byproduct of rapeseed oil production to go around, industry officials said.

 

While the record pace of Canada's rapeseed crush is primarily due to the growing international demand for vegetable oil, world feed grain supplies are also tight, which creates a market for the meal.

 

Canada's rapeseed oil crush was running at an annual rate of 93 percent of capacity as of March 19, according to the Canadian Oilseed Processors Association. Crushings to date, of 2.54 million tonnes, compare with 2.16 million at the same point the previous crop year (Aug/Jly). Rapeseed typically has an oil content of about 40 percent, which means 60 percent of the tonnage ends up as meal, according to COPA data.

 

"So far, the meal demand is holding up well," said Dave Hickling, vice president of rapeseed utilization with the Rapeseed Council of Canada. He pointed out that the majority of the demand was coming from the US dairy industry.

 

"Demand for mid-proteins has been excellent," said a senior rapeseed meal merchant with a major Canadian crushing company. "We're finding homes for rapeseed meal," he said adding that there are currently no cheap feed alternatives available.

 

"We're doing everything we can, and margins have been good enough for us to find markets...it hasn't been that big of a struggle to get rid of," the merchant said.

 

"The export demand (for mid-proteins) is there because the whole world is looking for some type of protein source for their livestock. There is a shortage (of animal feed) and there probably will be again in the fall". Dave Hickling, vice president of rapeseed utilization with the Rapeseed Council of Canada.

 

He said rapeseed was primarily competing with distillers dried grains - the byproduct of ethanol production, soy meal, and feed wheat. The merchant said that in addition to domestic usage, the bulk of Canada's rapeseed meal exports were purchased by the US dairy sector. Smaller amounts of business to Asian markets, and countries such as Ireland and Morocco, were also taking place.

 

The merchant said high CBOT soymeal futures prices and the resulting increase in rapeseed meal values had created some concern about finding markets for rapeseed meal. However, the recent drop in futures prices "has really improved the outlook for selling rapeseed meal," he said.

 

Canada exported roughly 1.59 million tonnes of rapeseed meal during the 2007 calendar year, with the U.S. accounting for 97 percent of that total, according to COPA data.

 

A US-based rapeseed meal merchant said the US dairy industry was having no problems fitting the increased rapeseed meal supplies into its rations for the time being. However, with Canada's rapeseed crush capacity set to see significant growth over the next few years, there could eventually be a need to find other markets.

 

"It looks like (rapeseed meal) will need to go beyond the dairy rations and into hogs and poultry, or find export destinations," said the US rapeseed meal merchant. "But that's probably two to three years out." He expected any additional rapeseed meal would continue to find a home, "at the right price."