China Key to Canada's Canola and Soybean Export Outlook

Posted on Mon, 04/06/2020 - 15:12

There have been no shortage of challenges for the Canadian oilseed sector in 2019-20, as producers dealt with “unfavorable weather conditions, transportation challenges, African swine fever (ASF), market access issues, low farm gate prices and now Covid-19,” reports a U.S. ag attaché in the country. The post details that more than 2% of the canola crop had not been harvested as of December 2019 and much of the crop came off with high levels of moisture, upping the odds for quality deterioration while in storage.

Looking ahead, the attaché says, “Area seeded to canola in MY 2020-21 is forecast to remain consistent with last year, limited by low-priced canola and large on-farm canola stocks but buoyed by returns on investment that continue to exceed most other competing crops.” Thus, the post expects Canada’s canola crop to climb from 18.649 MMT in 2019-20 to 19.000 MMT in 2020-21. 

The post goes on to note that canola seed exports suffered notably in 2019-20 due to market access issues (likely related to Canada’s detention of a Huawei executive who was under U.S. warrant) and African swine fever in China, though increased market share in the European Union helped to reduce Canada’s losses. But the post notes that as EU supplies return to recent historic levels and Canada and China fail to resolve tensions, canola exports “will be severely hampered in MY 2020-21.” Of note, China last week gave some indication it may resume imports of canola from Canada, though it seemed to backpedal on the matter soon after. The attaché calls for Canadian canola exports to slide from 9.2 MMT in 2019-20 to 9.0 MMT in 2020-21.

The post expects Canada’s soybean plantings to decline for the third year in a row, but production is expected to rebound 5% to 6.4 MMT on a return to normal yields and abandonment levels. Canada is likely to export 4.5 MMT of that tally, according to the post. “Restoring access to China will be critical to reviving historic export levels in MY 2020-21,” the attaché explains.