World oilseed rape prices, whose tightness has been evident in a surge in Chinese rapemeal futures, are set to receive "sustained support" thanks to the extent of the decline in supplies in Canada, the top exporter.

Canada's farm ministry overnight restated a forecast of a sharp recovery in canola production in 2013 from last year's weather and disease damaged levels, despite a forecast of a fall in seedings, the first for more than a decade.

The harvest is expected to rise 16% to 15.5m tonnes "due to higher yields", the ministry said.

However, even this increase will be insufficient to sink prices, given the extent of the drain on Canadian stocks caused by successive seasons of production deficits.

'Fundamental tightness'

Combined inventories in major rapeseed shippers Canada, which accounts for two-thirds of world exports, and Australia, which has a share of some 10-20%, are seen falling by 35% in 2012-13 to a 14-year low of 700,000 tonnes.

Even with the better Canadian crop expected this year, the country's stocks are not rebuild too much for 2013-14, according to the International Grains Council.

"With domestic use and exports projected to recover solidly, 2013-14 end-season carryovers are expected to show little year-on-year change and remain at historically-low levels," the IGC said.

"Consequently, with availabilities likely to remain thin in Canada, and limited capacity in other suppliers to lift exports to meet any potential expansion of global demand, fundamental tightness could provide sustained market support in 2013-14."

Canada's farm ministry said it expected domestic prices of canola, the rapeseed variant, to fall "slightly" in 2013-14, "under pressure from increased world supplies of palm oil, soyoil and soymeal".

Squeezed supplies

The cautions are the latest in a series over world rapeseed supplies, with Oil World warning two weeks ago over that a lack of the oilseed in the European Union, the top consumer, would reduce crushings in the first half of the year to 9.68m tonnes, from 10.55m tonnes a year ago.

January-June 2013 rapeseed crushings in the European Union are likely to fall to 9.68 million tonnes from 10.55 million tonnes in the same period in 2012, Oil World forecast.

And even that would require 2012-13 imports of 3.0m tonnes, the influential analysis group said, upgrading its estimate by 250,000 tonnes.

"It remains to be seen, however, whether sufficient quantities can be purchased from Australia and the former Soviet Union countries to reach our estimate," Oil World said.

In China, rapemeal prices for the futures contract that the Zhengzhou exchange launched in December have set a series of record highs, gaining support also from fears that cold weather has damaged winter crops.

The benchmark September contract touched 2,639 yuan a tonne on Friday, up 14.0% so far in 2013.