| WINNIPEG, Manitoba, Sept 12
WINNIPEG, Manitoba, Sept 12 Canada's expected
record-large canola crop looks to re-stock the country's seed
exporters and crushers after a disappointing previous harvest,
and top up already growing global oilseed supplies, industry
Canada is the world's biggest producer of canola, which is
mainly used to make vegetable oil for foods like potato chips
and salad dressings. Statistics Canada pegs this year's harvest
at 14.7 million tonnes, but many traders and analysts expect
output to be even higher.
A bountiful harvest is just what Canadian crushers and seed
exporters need after last year's 13.9-million tonne harvest left
skimpy supplies by summer that inflated prices.
"We should have a fairly consistent or fluid pipeline for
this entire year," said Dean McQueen, vice-president of
merchandising and transportation at Viterra, one of
Western Canada's two biggest crop handlers and owner of a canola
plant in Manitoba.
This year's bumper crop comes amid concerns that hot, dry
weather will trim production of U.S. soybeans, a rival to canola
in the global vegetable oil market.
Even so, the U.S. Department of Agriculture forecasts global
soybean production of nearly 282 million tonnes in 2013/14, an
increase of 5 percent from the previous year. The world
canola/rapeseed harvest is forecast around 66 million tonnes, up
nearly 7 percent, while global palm oil output of 58 million
tonnes also looks to rise 5 percent, according to USDA.
There are few worries, however, that canola demand can keep
pace with supply.
"The cupboard was pretty bare at the end of (2012/13), so I
don't see us having a huge excess of production lying around,"
said Kevin Price, senior trader for the Canadian office of
Singapore-based Agrocorp International.
"Canola can differentiate itself in the market quite well."
The industry markets canola oil as one of the healthiest
vegetable oils, due to its low level of saturated fat.
Agriculture and Agri-Food Canada estimates that Canadian
canola exports will climb by 450,000 tonnes or 6 percent in
2013/14 due to larger supplies and strong global consumption.
Canada exported 7.2 million tonnes of canola seed in
2012/13, down 16 percent from the previous year. China was the
biggest export destination, followed closely by Japan.
Japanese purchases should remain steady, Price said, while
Chinese buys are harder to predict.
"If the price is right, (China) will continue to buy," he
Canada accounts for about 59 percent of global exports of
canola, also known as rapeseed, followed by Australia and
CRUSHERS SEE REBOUND FROM SLOWER YEAR
The crushers who belong to Canadian Oilseed Processors
Association (COPA) processed 6.7 million tonnes of canola seed
in 2012/13 (August/July), falling short of the previous year's
record-high 7 million tonnes.
"You're going to see a much higher crush number this year
than we saw last year," said Ken Campbell, vice-president of
North American softseed crushing for Archer Daniels Midland
The Illinois-based agribusiness giant, which operates two
Canadian crushing plants, sees Canadian crushings of up to 7.5
million tonnes in 2013/14.
Crushers only used about 83 percent of their capacity in
2012/13, down from nearly 89 percent in the previous year. That
was partly due to high canola prices that pinched margins.
But with prices tumbling as the new harvest arrives, margins
on Wednesday were around $109 per tonne based on nearby futures
contracts, up 43 percent from a month ago.
"I'm optimistic that the crushers are going to battle it out
versus the exporters for seed," Campbell said, adding that
exporters will still likely claim most of the new crop.
The United States and China were the biggest importers in
2012/13 of Canadian canola oil, used for producing vegetable oil
and biodiesel, and look to be big buyers again, McQueen said.
The U.S. also accounts for about 90 percent of exports of
canola meal, used largely as animal feed.
Down the road, Canadian crushers will need even bigger
supplies. ADM expects to complete construction of Canada's
largest biodiesel plant at Lloydminster, Alberta within weeks,
while Louis Dreyfus Commodities, Bunge Ltd and
Richardson International are all expanding.
Cargill Ltd is building a new plant at Camrose,