EU imports of Canadian canola could treble in 2019-20

European Union purchases of rapeseed from Canada are poised to treble, as the country strives to a fill a record import roster, which has already virtually exhausted potential for purchases from Ukraine.

The EU’s imports of rapeseed-variant canola from Canada, which have hit 311,046 tonnes so far in 2019-20, on a July-to-June basis, will hit 1.2m-1.3m tonnes by the end of it, said James Webster, senior analyst at the AHDB bureau.

That would be three times the 443,000 tonnes imported from Canada in 2018-19, on data from the European Commission, which pegged at 332,000 tonnes the average for the previous five seasons.

And it reflects a shortfall in alternative supplies which backs an expectation of “relatively firm” EU rapeseed prices ahead, following a weak harvest in the bloc itself, which has created an “import requirement of about 6m tonnes” of the oilseed, which would be the highest figure on record.

Australia concerns

Ukraine, with an export surplus of some 2.7m tonnes following a bumper harvest, will meet much of the demand, with Mr Webster noting talk that some 2.3m tonnes of that has already been committed for export.

However, Australia, historically the largest origin for EU rapeseed imports, will not be sufficient to fill much of the EU’s outstanding needs, given the prospect of another poor harvest this year.

While Abares, the official Australian crop bureau, has forecast the country’s overall canola shipments in 2019-20 at 1.61m tonnes, that assumes a 2.3m-tonne harvest that Mr Webster said was looking an overestimate “in the teeth of the drought we are seeing”.

The harvest “would be 2.0m tonnes using last year’s yield”, which the crop was also shrunk by dryness.

Rapeseed vs canola

Whatever exportable surplus Australia does achieve will see demand from rival importers to the EU, such as China – which has curtailed its imports of Canadian canola amid a diplomatic dispute, Mr Webster said.

The dynamics leave the EU looking to Canada for significant shipments - trade that is being spurred by price signals from futures markets.

“Differentials are really starting to incentivise the import of rapeseed into the EU,” he told the AHBD’s Grain Market Outlook Conference in London.

Rapeseed vs palm oil

The dynamics are also supporting imports of rival oilseed soybeans to the EU, he noted.

EU soybean imports so far in 2019-20 have hit 3.64m tonnes, actually marginally below the year-ago level, when the dent to US prices from the tariff war with China, but up 14.3% from the same period of 2017-18.

However, Mr Webster cited competition from palm oil as key to keeping EU values of rapeseed, an oil-heavy oilseed, in check.

“Palm oil is still relatively cheap, and will cap gains in the rapeseed market,” he said, although seeing potential for some improvement in palm values.

Production of palm oil in its key South East Asia output region is heading into a seasonal decline, at a time when there are market ideas of increasing consumption needs in China and India, he told the conference.