Canada Shifts Rapeseed Exports To Offset Lost China Sales

In 2019, Canada rapeseed exports to China plummeted by two-thirds due to significant loss in market access coupled with low demand for meal due to African swine fever. Consequently, Canadian exporters shifted focus to boost market share elsewhere.

With global production of rapeseed down slightly in 2018/2019, many trading partners, especially those that historically relied on Australia rapeseed, sought additional sources. The European Union, with production down by nearly 2 million tons, imported three times more rapeseed from Canada in 2019 than in 2018. Gains were also made across the Middle East, largely in the United Arab Emirates where Canada claimed 95 percent market share and in Pakistan where Canada claimed 100 percent market share. In Bangladesh, imports of rapeseed from Canada boomed ten-fold to nearly 200,000 tons. These additional outlets helped offset some of the loss in trade to China, reducing Canada’s decline in overall rapeseed exports to only 20 percent from 2018.

For marketing year 2019/20, production is down for a second consecutive year as dim prospects for resolving market access issues in China and recovering export volume influenced farmers’ planting decisions. Canada rapeseed exports will likely continue to rely on non-China markets, and are expected to recover slightly from marketing year 2018/19. The pace of shipments in the latter half of the year is expected to pick up as high beginning stocks will help offset smaller global production and supply in 2019/20.

PROJECTION FOR 2019/20

Global 2019/20 oilseed production is forecast at 580 million tons, a 3-million-ton increase from February primarily driven by larger soybean crop forecasts for Brazil and Argentina. Trade in oilseeds is largely unchanged with production growth feeding higher ending stocks which are revised up 3 million tons. Protein meal production is down 1 million tons from last month to 339 million tons on lower Argentina soybean meal production. Protein meal ending stocks are down slightly from February. Vegetable oil production is reduced 1 million tons on lower palm oil output in Malaysia. Imports of vegetable oil are down 2 million tons, partly due to reduced palm oil imports in China and Benin. The projected U.S. season-average farm price for soybeans is lowered by $0.05 to $8.70 per bushel.

EXPORT PRICES

Export prices for soybeans, soybean meal, and soybean oil fell across all major exporters in February. U.S. Gulf FOB soybean export bids in February averaged $350/ton, down $12 from January. Brazil Paranagua FOB averaged $346/ton, down $13 from January. Argentina Up River FOB averaged $347/ton, down $15. Soybean meal export prices were volatile in February, falling on average but ending the month at their highest levels since June 2019. U.S. soybean meal export bids in February averaged $334/ton, down $6 from January. Brazil Paranagua FOB averaged $317/ton, down $4 from January, and Argentina Up River FOB averaged $330/ton, down $7. Soybean oil prices fell sharply with monthly average declines of $75/ton, $79/ton, and $66/ton in Argentina, Brazil, and the United States respectively due to weaker demand. Despite lower exportable supplies and tighter ending stocks, palm oil prices also dropped off with monthly average prices falling $94/ton in Indonesia and $86/ton in Malaysia on concerns over falling demand. The margin between soybean oil prices and palm oil prices expanded slightly, with palm oil prices declining more steeply than soybean oil.

EXPORT SALES

As of the week ending February 27, 2020, U.S. soybean accumulated exports (shipments) to China totaled 11.9 million tons and 17.7 million to the rest of the world. Outstanding sales were 293,000 tons to China and 4.1 million to the rest of the world. Last year at this time, accumulated exports to China were 3.7 million tons and 22.7 million to the rest of the world, and outstanding sales to China were 5.7 million tons and 4.6 million to the rest of the world. U.S. soybean export commitments (outstanding sales plus accumulated exports) to China totaled 12.2 million tons compared to 9.4 million a year ago. Total commitments to the world were 34.1 million tons, compared to 39.1 million for the same period last year.