Canada: Outlook for canola and soybean meal production

By Aerin Einstein-Curtis

- Last updated on GMT

© iStock
© iStock

Related tags: Canola meal, Milk, Canada

Oilseed crush in Canada this year is forecast to dip 4% to 10.5 million metric tons (MMT) from 11 MMT in 2016/17 due to low carry-in stocks and only a modest rise in overall oilseeds production available for crushing, said the USDA.

Total meal production in 2017/2018 is also forecast to decrease by 3% to 6.4 MMT from 6.6 MMT in 2016/17, noted an attaché’s report​ ​from the US Department of Agriculture (USDA).

Canola and soybean crush in that country is forecast down. 

Canadian canola meal outlook 

The majority of the canola meal produced in Canada is exported to the US for use in the dairy industry. "Canola meal, when added to the dairy cow’s diet, has proven to boost milk production,"​ according to the US agency.

It predicted that Canola meal production in Canada in 2017/2018 will fall 4% to 4.8 MMT from 5 MMT in 2016/17.

Statistics Canada is projecting canola prices to rise in 2017/18 to $505-535/t versus $509/t in 2016/17 and it forecast that the tightening of the stocks-to-use ratio to 1% should support canola prices above levels implied by world soybean oil and soybean meal prices.

In 2017/2018, the USDA expects to see lower domestic supplies lead to slightly lower canola meal exports, in the range of 2%. The agency said higher beginning stocks in 2017/18, up by nearly 18% from the previous year should translate into a lower need for imports, down by 12% from 2016/17.

Growth in domestic demand from the Canadian dairy industry is limited by Canada’s restrictions on milk production though, said the USDA. For these reasons, it has forecast domestic canola meal usage for feed in 2017/2018 to jump by 5% on trend at 672 thousand metric tons (TMT).

Soybean meal outlook 

Soybean meal produced in Canada is primarily consumed in the domestic livestock industry. The USDA is forecasting soybean meal production in 2017/2018 to rise modestly by less than a percentage point to 1.58 MMT.

It is predicting imports of soymeal into Canada in 2017/2018 will drop by 4% to 717 TMT as a result of a slight rise in production and a weaker Canadian dollar against the US dollar.

Nearly all of Canada’s soymeal imports come from the US. However, the USDA said it expects the weaker Canadian dollar to raise exports of soybean meal in 2017/18 by 39% to 277 TMT compared to 200 TMT in 2016/17.

"Feed consumption in 2017/2018 is forecast to decrease slightly to 2 MMT due to lower domestic supplies resulting from lower crush. While there seems to be some loosening of provincial policies in 10 Western Canada that have been restricting hog expansion, any increase in hog production will be very gradual.

The repealing of the Country of Origin Labelling (COOL) legislation is also expected to have little impact on feed consumption in the next crop year," ​noted the USDA.

China trade 

Although there have been no further developments in this matter since September 2016, the USDA also noted the announcement by Global Affair Canada earlier this month that it is launching consultations on a potential Canada-China free trade agreement. China accounts for nearly one half of Canadian canola exports.

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