Highlights

Canada's oilseed production (canola, soybeans, and sunflowers) for 2017/2018 is forecast to rise modestly to 25.3 million metric tons (MMT), up 1 percent from 2016/2017, driven by a small increase in canola production and expected yields. Total crush is forecast to drop by 4 percent to 10.5 MMT from the 2016/2017 anticipated crush levels of 11 MMT. The canola crush forecast is down 377 thousand metric tons (TMT) in 2017/2018 with no increase in production expected.

Executive Summary

Total oilseeds production (canola, soybean, and sunflower seed) in 2017/2018 is forecast at 25.3 million metric tons (MMT), up 1percent from 2016/2017. Crush in 2017/2018 is forecast to drop 4 to 10.5 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.

Canadian oilseed exports are forecast to remain virtually unchanged at 14.230 MMT in 2017/18 from 14.232 MMT in 2015/16. A weaker Canadian Dollar and strong crush capacity are expected to support Canadian oilseed exports in 2017/2018. Total meal production in 2017/2018 is forecast to drop by 3 percent to 6.4 MMT from 6.6 MMT in 2016/17 due to a very limited change total oilseeds production.

Total oils production in 2017/2018 is forecast to decrease slightly to 4.15 MMT down 3 percent from 4.3 MMT in 2016/17. Total meal exports in 2017/2018 will remain close to 4.6 MMT, down only 11 TMT from 2016/17.

Total oils exports in 2017/18 are projected at 3.15 MMT, down by 4 percent from 3.3 MMT in 2016/17.

Total Oilseeds

Based on current market conditions and historical trends, the area seeded to field crops in 2017/18 is forecasted to increase marginally compared to 2016/17. Post is forecasting a 9 percent rise in area harvested for canola, soybeans, and sunflower seeds combined in 2017/18 at 10.8 million hectares. However, Post expects to see a modest 2 TMT decline in exports in 2017/18 due to steady world demand and tighter domestic supplies.

Oilseed, Rapeseed

2015/2016

2016/2017

2017/2018

Year

Aug 2015

Aug 2016

Aug 2017

Canada

USDA

New

USDA

New

USDA

New

Area Planted

8,363

8,363

8,1

8,1

0

8,5

Area Harvested

8,322

8,322

8,05

8,05

0

8,4

Beginning Stocks

2,542

2,542

2,016

2,016

0

1,377

Production

18,377

18,377

18,5

18,5

0

18,5

MY Imports

104

104

100

100

0

100

MY Imp. from US

100

100

95

95

0

95

MY Imp. from EU

0

0

0

0

0

0

Total Supply

21,023

21,023

20,616

20,616

0

19,977

MY Exports

10,278

10,278

9,8

9,8

0

9,5

MY Exp. to EU

450

450

400

400

0

400

Crush

8,315

8,315

9

9

0

8,623

Food Use Dom.

0

0

0

0

0

0

Feed Waste Dom.

414

414

439

439

0

426

Total Dom. Cons.

8,729

8,729

9,439

9,439

0

9,049

Ending Stocks

2,016

2,016

1,377

1,377

0

1,428

Total Distribution

21,023

21,023

20,616

20,616

0

19,977


RAPESEED (CANOLA), OILSEED

Production, Supply and Distribution Estimates:

The fall 2016 harvest was challenging in the Canadian Prairies for most field crops due to excess rain, frost, and snow. While excess rain caused a few problems for canola plants there were still expectations of a very large harvest. As of November 29th, 2016, 87 percent of Alberta’s canola had been harvested. Four percent of Saskatchewan’s canola was still left to be combined. Similar weather conditions occurred in Manitoba, where the canola harvest was 95 percent completed by mid-October. The Canadian Canola Council has noted that spring harvested canola tends to have lower weights, lower oil content, higher fatty acids in the oil and contain more impurities. And if left in swath too long, the crop would be more susceptible to pest issues like mice and fungal pathogens.

Area planted to canola is forecast to rise by 5 percent in 2017/18, to 8.5 million hectares as returns remain attractive compared to other field crops. Production in 2017/18 is forecast to remain steady at 18.5 MMT. However, total supply is forecast to decrease slightly by 3 percent due to 32 percent lower carry-in stocks of 1.4 MMT compared with 2 MMT in 2016/17.

Post does not expect to see any increase in crush capacity in 2017/18. Canada's 14 crushing and refining plants have the capacity to crush about 10 million tons of canola seed, and produce about 3 million tons of canola oil and 4 million tons of canola meal annually. Post forecasts the 2017/2018 canola crush at 8.6 MMT, down 4 percent from 2016/17.

Canola is highly dependent on the export markets, with between 50 and 60 percent of the production going to export. Canola seed exports in 2017/2018 will be limited by lower domestic supplies. Exports are forecast down in 2017/18 at 9.5 MMT due to steady world demand and tight domestic supplies.

Carry-out stocks of canola are forecast up slightly in 2017/18 at 1.4 MMT for a stocks-to-use ratio of 7.7 percent, which is considered tight.

SOYBEAN, OILSEED

Production, Supply and Distribution Estimates

Oilseed, Soybean

2015/2016

2016/2017

2017/2018

Market Begin Year

Aug 2015

Aug 2016

Aug 2017

Canada

USDA

New

USDA

New

USDA

New

Official

Post

Official

Post

Official

Post

Area Planted

2,2

2,2

2,2

2,2

0

2,435

Area Harvested

2,197

2,197

2,18

2,18

0

2,413

Beginning Stocks

466

466

301

301

0

287

Production

6,371

6,371

6,45

6,45

0

6,71

MY Imports

308

308

350

350

0

250

MY Imp. from U.S.

246

246

280

280

0

206

MY Imp. from EU

0

0

0

0

0

0

Total Supply

7,145

7,145

7,101

7,101

0

7,247

MY Exports

4,258

4,258

4,4

4,4

0

4,7

MY Exp. to EU

1,045

1,045

900

900

0

900

Crush

2

2

2

2

0

1,9

Food Use Dom.

0

0

0

0

0

0

Feed Waste Dom.

586

586

414

414

0

400

Total Dom. Cons.

2,586

2,586

2,414

2,414

0

2,3

Ending Stocks

301

301

287

287

0

247

Total Distribution

7,145

7,145

7,101

7,101

0

7,247


For 2017/18, Post is forecasting planted area to rise by 11 percent, to a record 2.4 million hectares due to relatively attractive returns compared to alternative crops. Although the province of Ontario continues to lead in soybean acreage, Manitoba is rapidly expanding with acreage in 2016 up 18 percent from 2015 and doubling in the last five years. Not too far behind, Saskatchewan’s soybean acres have increased 40 percent in the last four years as producers embrace the high returns on the crop, which tend to do well in southern Saskatchewan’s summer heat and loamy soils that hold in moisture longer.

Post is forecasting a 4 percent increase in soybean production for 2017/18 with 6.7 MMT, compared with 6.45 MMT in 2016/17.

Post expects to see a 7 percent rise in soybean exports in 2017/18 as a result of stronger production numbers. Statistics Canada is forecasting soybean prices to fall to $435-475/t as pressure from lower American prices is mostly offset by the weakness of the Canadian Dollar, which should also account for a higher outflow of soybeans. Imports in 2017/18 are forecast to drop by 29 percent from the previous year with high expectations that production will offset low beginning stocks in 2017/18. However, Post forecasts even lower ending stocks in 2017/18 at 247 TMT, down 14 percent from 287 TMT in 2016/17.

While there are discussions of the value of building a soybean crush facility in the Canadian Prairies, there are no current plans to do so. Current soybean crush capacity is estimated at 3.2 MMT. Domestic soybean crush in 2017/2018 is forecast to fall by 5 percent to 1.9 MMT as a result of lower beginning stocks.

SUNFLOWER SEED, OILSEED

Production, Supply and Distribution Estimates:

Oilseed, Sunflower

2015/2016

2016/2017

2017/2018

Market Begin Year

Aug 2015

Aug 2016

Aug 2017

Canada

USDA

New

USDA

New

USDA

New

Official

Post

Official

Post

Official

Post

Area Planted

38

38

28

28

0

30

Area Harvested

38

38

28

28

0

29

Beginning Stocks

10

10

10

10

0

6

Production

73

73

51

51

0

55

MY Imports

25

25

30

30

0

30

MY Imp. from U.S.

22

22

27

27

0

27

MY Imp. from EU

0

0

0

0

0

0

Total Supply

108

108

91

91

0

91

MY Exports

40

40

32

32

0

30

MY Exp. to EU

0

0

0

0

0

0

Crush

0

0

0

0

0

0

Food Use Dom.

8

8

8

8

0

8

Feed Waste Dom.

50

50

45

45

0

48

Total Dom. Cons.

58

58

53

53

0

56

Ending Stocks

10

10

6

6

0

5

Total Distribution

108

108

91

91

0

91


For 2017/18, Post is forecasting an 8 percent rise in sunflower seed production at 55 TMT on expectations of higher yields and good returns relative to other crops. Similarly, exports and carry-out stocks are expected to remain just below 2016/17 levels due to lower carry-in stocks. The United States is Canada’s main export market for sunflower seed and accounts for over 95 percent of Canada’s total exports.

The National Sunflower Association of Canada estimates that approximately 70 percent of national production is used for confectionary products such as processed seeds in the shell or hulled for the snack market and the baking industry.

There is currently no large scale crush facility in the province of Manitoba where 90 percent of Canadian sunflower seeds are produced. Most of the Canadian sunflower oil production is either processed in the province for the bird food market or exported as a raw product to crush facilities in the United States.

OILMEALS

For 2017/18, Post is forecasting a 4 percent drop in total canola and soybean crush to 10.4 MMT due to a rise in crop production in the oilseeds sector, which should offset lower carry-in stocks from 2016/17. As a result, total meal production is forecast to decline 3 percent from 6.6 MMT in 2016/17 to 6.4 MMT in 2017/18.

Meal imports in 2017/2018 are forecast to decrease to 732 MMT, 4.5 percent below 2016/2017 levels due to higher projected domestic crush.

Post is forecasting virtually no change in total meal exports for 2017/18 at 4.6 MMT. A weaker Canadian Dollar against the American Dollar is expected to do little more than maiantain oilseeds meal exports.

RAPESEED (CANOLA) MEAL

Production, Supply and Distribution Estimates


Meal, Rapeseed

2015/2016

2016/2017

2017/2018

Market Begin Year

Aug 2015

Aug 2016

Aug 2017

Canada

USDA

New

USDA

New

USDA

New

Official

Post

Official

Post

Official

Post

Crush

8,315

8,315

9

9

0

8,623

Extr. Rate,

0.561

0.561

0.5611

0.5611

0

0.5633

Beginning Stocks

99

99

141

141

0

166

Production

4,665

4,665

5,05

5,05

0

4,857

MY Imports

15

15

17

17

0

15

MY Imp. from

9

9

10

10

0

11

MY Imp. from EU

0

0

0

0

0

0

Total Supply

4,779

4,779

5,208

5,208

0

5,038

MY Exports

4,035

4,035

4,4

4,4

0

4,312

MY Exp. to EU

0

0

0

0

0

0

Industrial Dom.

0

0

0

0

0

0

Food Use Dom.

0

0

0

0

0

0

Feed Waste Dom.

603

603

642

642

0

672

Total Dom. Cons.

603

603

642

642

0

672

Ending Stocks

141

141

166

166

0

54

Total Distribution

4,779

4,779

5,208

5,208

0

5,038

Canola is crushed for its oil and the canola meal is sold at a discount compared to soybean meal due to its lower protein content. The majority of the canola meal produced in Canada is exported to the United States for use in the dairy industry. Canola meal, when added to the dairy cow’s diet, has proven to boost milk production.

Canola meal production in 2017/2018 is forecast to fall 4 percent to 4.8 MMT from 5 MMT in 2016/17. Statistics Canada is projecting canola prices will rise in 2017/18 to $505-535/t versus $509/t in 2016/17. Statistics Canada has pointed out that the tightening of the stocks-to-use ratio to 1 percent should support canola prices above levels implied by world soybean oil and soybean meal prices.

Nearly all canola meal is exported for use as feed in the United States dairy industry and has been growing as Canadian crush capacity has increased. In 2017/2018, Post expects to see lower domestic supplies lead to slightly lower canola meal exports, in the range of 2 percent. Post expects that higher beginning stocks in 2017/18, up by nearly 18 percent from the previous year will translate into a lower need for imports, down by 12 percent from 2016/17. Growth in domestic demand from the Canadian dairy industry is limited by Canada’s restrictions on milk production. For these reasons, Post has forecasted domestic usage for feed in 2017/2018 up by 5 percent on trend at 672 TMT.

SOYBEAN MEAL

Production, Supply and Distributio:n Estimates


Meal, Soybean

2015/2016

2016/2017

2017/2018

Market Begin Year

Aug 2015

Aug 2016

Aug 2017

Canada

USDA

New

USDA

New

USDA

New

Official

Post

Official

Post

Official

Post

Crush

2

2

2

2

0

1,8

Extr. Rate,

0.785

0.785

0.784

0.784

0

0.8772

Beginning Stocks

82

82

32

32

0

30

Production

1,57

1,57

1,568

1,568

0

1,579

MY Imports

789

789

750

750

0

717

MY Imp. from

770

770

740

740

0

703

MY Imp. from EU

0

0

0

0

0

0

Total Supply

2,441

2,441

2,35

2,35

0

2,326

MY Exports

334

334

200

200

0

277

MY Exp. to EU

84

84

40

40

0

25

Industrial Dom.

0

0

0

0

0

0

Food Use Dom.

0

0

0

0

0

0

Feed Waste Dom.

2,075

2,075

2,12

2,12

0

2,019

Total Dom. Cons.

2,075

2,075

2,12

2,12

0

2,019

Ending Stocks

32

32

30

30

0

30

Total Distribution

2,441

2,441

2,35

2,35

0

2,326


Soybean meal produced in Canada is primarily consumed in the domestic livestock industry. Post is forecasting soybean meal production in 2017/2018 to rise modestly by less than a percentage point to 1.58 MMT due to tighter supplies available for crush.

Post is forecasting imports of soymeal in 2017/2018 will drop by 4 percent to 717 TMT as a result of a slight rise in production and a weaker Canadian Dollar against the U.S Dollar. Nearly all of Canada’s soymeal imports come from the United States. However, Post expects the weaker Canadian Dollar to raise exports of soybean meal in 2017/18 by 39 percent 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 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.

For 2017/18 Post is forecasting a 3 percent lower domestic oil production of 4.15 MMT due to tight carry-in stocks and marginal production increase of canola and soybean of one percent over 2016/17.

Despite tighter beginning stocks in 2017/18 imports of oils are forecast to drop by 3 percent, most likely due to the weaker Canadian Dollar. However, it will be challenging to take advantage of the low Canadian Dollar for exports as the domestic supply of oils will be constrained. Therefore, Post is forecasting that exports for 2017/18 will decrease by 4 percent with 3.15 MMT of oil, down from 3.3 MMT in 2016/17.

RAPESEED (CANOLA) OIL

Production, Supply and Distribution Estimates

Market Begin Year

2015\2016

2016/2017

2017/2018

Canada

Aug 2015

Aug 2016

Aug 2017

USDA Official

New Post

USDA Official

New Post

USDA Official

New Post

Crush

8,315

8,315

9

9

0

8,623

Extr. Rate,

0.436

0.436

0.4372

0.4372

0

0.4392

Beginning Stocks

398

398

495

495

0

500

Production

3,625

3,625

3,935

3,935

0

3,787

MY Imports

46

46

50

50

0

38

MY Imp. from

44

44

50

50

0

38

MY Imp. from EU

0

0

0

0

0

0

Total Supply

4,069

4,069

4,48

4,48

0

4,325

MY Exports

2,766

2,766

3,15

3,15

0

3,005

MY Exp. to EU

54

54

55

55

0

0

Industrial Dom.

154

154

180

180

0

180

Food Use Dom.

654

654

650

650

0

650

Feed Waste Dom.

0

0

0

0

0

0

Total Dom. Cons.

808

808

830

830

0

830

Ending Stocks

495

495

500

500

0

490

Total Distribution

4,069

4,069

4,48

4,48

0

4,325


For 2017/18 Post is forecasting canola oil production down by 148 TMT from 2016/17 as a result of lower canola seed carry-in, which is unlikely to be offset by higher canola production. Similarly, crush is also forecast down 4 percent for 2017/18 for the same reasons.

Canola oil exports in 2017/2018 are projected down to 3 MMT, 4.6 percent below 2016/2017’s estimate of 3.15 MMT. Year-to-date export data shows that China has doubled its canola oil imports from Canada, while the United States, the largest export market for Canada, is on track to import similar volumes to the previous year.

Post foresees a decrease in Canola oil imports in 2017/2018 as a result of the lower Canadian Dollar. Therefore, Post forecasts canola oil imports in 2017/2018 at 38 TMT, down 24 percent from 50 TMT in 2016/17.

Post does not foresee any change in domestic use or consumption of canola oil in 2017/18, but given lower supplies, forecasts tighter ending stocks at 490 TMT, down 2 percent from the previous year.

SOYBEAN OIL

Production, Supply and Distribution Estimates

Post is forecasting soybean oil production to increase by one percentage point in 2017/2018 from 360 TMT in 2016/17 to 365 TMT to reflect a modest 4 percent production increase in soybean output, lower carry-in of soybeans and crush.

Post also foresees soybean crush to drop modestly as lower supplies of soybeans are available due to weaker carry-in stocks of soybeans.

In 2017/2018, Post expects to see a small one percent drop in exports of soybean oil at 148 TMT compared with 150 TMT in 2015/2016 as a result of tighter crush. The United States is expected to remain Canada’s number one export market in 2017/18 with 90 percent of exports going south of the border. While supplies of soybean oil in 2017/18 are expected to be adequate to achieve export opportunities and take advantage of the slumping Canadian Dollar, Post believes it is unlikely that domestic demand will require supplementing by imports. Post is forecasting a 40 percent drop in imports of soybean oil for 2017/18.

Post foresees tighter supplies of soybeans and oil to translate into much lower ending stocks of oil in 2017/18 at 15 TMT, down 44 percent from the previous year.

PEANUTS

Oilseed, Peanut


Oilseed, Peanut

2015/2016

2016/2017

2017/2018

Market Begin Year

Oct 2015

Oct 2016

Oct 2017

Canada

USDA

New

USDA

New

USDA

New

Official

Post

Official

Post

Official

Post

Area Planted

0

0

0

0

0

0

Area Harvested

0

0

0

0

0

0

Beginning Stocks

5

5

5

5

0

5

Production

0

0

0

0

0

0

MY Imports

155

155

157

157

0

143

MY Imp. from U.S.

131

131

133

133

0

119

MY Imp. from EU

0

0

0

0

0

0

Total Supply

160

160

162

162

0

148

MY Exports

2

2

2

2

0

1

MY Exp. to EU

0

0

0

0

0

0

Crush

0

0

0

0

0

0

Food Use Dom.

153

153

155

155

0

147

Feed Waste Dom.

0

0

0

0

0

0

Total Dom. Cons.

153

153

155

155

0

147

Ending Stocks

5

5

5

5

0

0

Total Distribution

160

160

162

162

0

148


Peanut production in Canada is constrained by climatic conditions. A minimum of 3,000 corn heat units is required for normal growth and development. Peanuts grown in areas with fewer heat units will not reach optimum maturity and generally the yield is too low to justify commercial production. As a result, minor peanut production is limited to a few farms in southern Ontario that plant in the range of 200-400 hectares. Canada is therefore a net importer of peanuts with the United States and China being the top suppliers.

Post is forecasting a 9 percent drop in peanut production in 2017/18 at 143 TMT, down from 157 TMT the previous year to reflect Ontario’s decreased production of oilseeds. The weaker Canadian Doller is expected to make importing peanuts less feasible for domestic processing and confectionary use rather than using up as much of the domestic supply as is available, which is why Post is forecasting ending stocks of peanuts at zero in 2017/18.

POLICY DEVELOPMENTS

Proposed Phase-out of Imidacloprid Neonicotinoid Pesticide: Comment Deadline Extended

On November 23rd, 2016 the Pest Management Regulatory Agency (PMRA) of Health Canada announced a proposed phase-out of the neonicotinoid seed treatment pesticide, imidacloprid, commonly used on corn and soybeans. The phase-out was proposed after an evaluation determined that under current conditions of use, the environmental risks for most products containing imidacloprid do not meet current safety standards.

The environmental assessment showed that, in aquatic environments in Canada, imidacloprid is being measured at levels that are harmful to aquatic insects. The environmental assessment also found that there is a potential risk to birds and small mammals from feeding on seeds that are treated with imidacloprid. The health assessment did not identify human health concerns from any exposure route when used according to current label standards.

The PMRA is proposing to phase-out all the agricultural and a majority of other outdoor uses of imidacloprid over three to five years. PMRA will consider alternate risk management proposals, provided that they can achieve acceptable levels in the environment in the same timeframe.

PMRA is inviting the public to submit comments on the proposed re-evaluation before making a final re-evaluation decision on imidacloprid. The PMRA will accept and consider written comments on this proposal received up to March 23rd, 2017.

Canada and China Negotiating Long-Term Rules on Canola Dockage

On September 1, 2016 China’s quarantine agency, AQSIQ was expected to reduce dockage allowances on imports of canola from 2.5 percent to 1 percent over concerns of blackleg disease. If passed, the new allowances would prove very challenging for export companies to meet as the technology is limited in how low a level of dockage it can achieve. However, Canadian Prime Minster Justin Trudeau was successful in extending current dockage rules beyond the September 1st deadline as the two countries continue to negotiate a long-term solution. Although there have been no further developments in this matter since September 2016, Global Affair Canada announced in early March that it is launching consultations on a potential Canada-China free trade agreement. China accounts for nearly one half of Canadian canola exports.