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Canola demand heading for record

(Resource News International) — Canada’s record large canola crop will need to be met by equally
large demand in order to keep carry-out supplies from climbing too high in
the upcoming year, according to industry sources who were anticipating
record demand from both domestic crushers and from export customers.

Canadian farmers grew a record 12.643 million-tonne canola crop in
2008-09, according to the latest Statistics Canada estimates.
Factoring in the carry-over from the previous year, the industry has 14.359
million tonnes of canola to find a home for.

Dave Hickling, vice-president of canola utilization with the Canola Council
of Canada, said actual demand was hard to pin down, due to variables such as
price, railcar availability, and the unknown demand from non-traditional
markets.

The industry, he said, was generally working with a domestic crush
estimate of 4.5 million tonnes, and an export forecast of six million
to 6.5 million. Both of those estimates would be records themselves,
according to historical government data.

The country’s crush capacity will keep the domestic demand from rising much
farther during the current crop year, according to Hickling, who noted that
a number of large processors being built won’t be online until the 2009-10
crop year at the earliest.

“It would be nice if we had that extra crush capacity this year,” said
Hickling, “because it definitely would have helped.”

As of Dec. 10, domestic processors had crushed 1.474 million tonnes
of canola, up from 1.44 million at the same point in the 2007-08 crop year,
according to the Canadian Oilseed Processors Association. Crop year-to-date

canola exports as of Dec. 7, reported by the Canadian Grain Commission,
of 2.623 million tonnes were well above the year-ago level of 1.827 million
tonnes.

Lach Coburn, West Coast manager with Cargill Ltd., said exports in October and November were already running at a record pace,
with the December lineup also looking good.

“We’re pushing hard. It’s very
busy,” said Coburn, adding he was expecting to see record utilization of
canola during the current crop year. However, just how large that record
will be remains to be seen.

“Just how much can we ship?” asked Coburn. “Because obviously there will be limitations.”

Canola exporter Adrian Man of Richardson International said there
was a good export program already on the books without any logistics
problems to speak of so far. He thought actual exports could end up even
higher than 6.5 million tonnes, given the latest StatsCan numbers, but added
that unexpected factors could always come forward to slow movement.

Man said reluctant farmer selling was one issue that could limit export

movement. He said it’s difficult to make forward sales if export
companies are having a hard time securing the supplies from farmers.

Agriculture and Agri-Food Canada currently forecasts domestic usage at
4.5 million tonnes, which would be up from 4.144 million in 2007-08. AAFC forecasts exports of 6.3 million tonnes, up from 5.661 million in
2007-08, leaving a total carryout of three million tonnes at the end of the
2008-09 crop year.

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