New record for Canadian canola crushing in 2018-19

China is buying increasing volumes of canola oil and meal from Canada, says Chris Vervaet, executive director of the Canadian Oilseed Processors Association.

TRADE Back-to-back record canola crushing is unlikely to result in increased crushing capacity due to trade uncertainty

China all but stopped importing Canadian canola seed in March, but it’s buying more Canadian canola oil and meal than ever.

Meanwhile, Canadian processors crushed a record 9.295 million tonnes of canola seed during the 2018-19 crop year, ending July 31, Statistics Canada figures show.

That’s up 0.3 per cent, or 26,000 tonnes, from the previous record crush set last crop year.

Why it matters: Crushing canola seed in Canada adds more value to Canada’s economy than exporting raw seed.

Despite two years of record canola crushing in a row, and the fact that Canadian processors are crushing to capacity, it’s unlikely they will add new capacity, says Chris Vervaet, executive director of the Canadian Oilseed Processors Association.

“There’s a level of uncertainty… folks are dealing with when it comes to China,” he said in an interview Aug. 23. “All these different trade issues just create a level of uncertainty for the industry at large, and canola crushers aren’t immune to that level of uncertainty. That’s not to suggest we have an immediate issue facing us, but plopping down 250 million to 350 million bucks for brand new, green field construction or any capacity upgrades in a world of uncertainty becomes quite the challenge. I would say the environment right now isn’t overly conducive to investments in the short to medium term.”

For canola crushers the 2018-19 crop year was a tale of two different stories, Vervaet said.

“I think there was a lot of optimism and opportunities during the first half and in the latter half there was a lot of pessimism as it relates to some of the indirect trade barriers that were put up and then obviously some of the more direct trade barriers that impacted the industry,” he said.

But while China turned its back on Canadian canola seed it was on pace to import more oil and almost as much or more meal in 2018-19 than the year before, Vervaet said, based on Statistics Canada export figures from Aug. 1, 2018 to May 30, 2019.

During that period, with two months in the crop year left, Canada had exported 932,356 tonnes of canola oil to China, up eight per cent from the 852,223 tonnes exported to China in all of 2017-18.

As of May 30 Canada had exported 1.11 million tonnes of canola meal to China. That’s not much under the 1.25 million tonnes exported to China in all of 2017-18.

The United States is Canada’s biggest canola oil and meal customer, followed by China.

“The U.S. is a big market, but China came on in a very big way,” Vervaet said. “There has been a strong trend over the last number of years of China buying increasingly bigger volumes of canola oil. Ditto on canola meal. We’ve seen the U.S. as our largest market (for meal) and that’s still the case, but China is coming on in a big, big way in terms of buying increasing volumes of canola meal as well.”

China’s voracious appetite for Canadian canola oil and meal only adds to the speculation around why it suddenly stopped buying canola seed in March. Many believe it’s in retaliation for Canada’s arrest of Huawei executive. But China claims Canadian canola seed was contaminated with weed seeds and plant diseases.

In the meantime, Canadian crushers are not taking the Chinese market for granted.

“We’re just watching this very carefully and closely,” Vervaet said.

About the author


Allan Dawson

Allan Dawson is a reporter with the Manitoba Co-operator based near Miami, Man. Covering agriculture since 1980, Dawson has spent most of his career with the Co-operator except for several years with Farmers’ Independent Weekly and before that a Morden-Winkler area radio station.



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