BY ANDREW KANYEMBA WITH ARGUS
Canada’s canola crushing capacity is set for substantial expansion, as rising global demand for canola oil, prompts large-scale investment in the sector.
Four major producers have announced plans to develop or substantially expand canola crushing facilities in Canada in the past 10 weeks, most recently agricultural conglomerate Ceres Global, which this week committed to develop a 1.1mn t/yr crushing plant in Northgate by 2024.
Trading companies Cargill and Viterra, as well as agribusiness company Richardson International, made similar announcements in March-April, which combined could boost Canada’s canola crushing capacity by 5.7mn t/yr from 2024, a rise of more than 50pc from 10.3mn t crushed in 2020, official data from Statistics Canada show.
Canada’s canola crushing rates have rocketed in recent months, with a record 958,000t processed in March and 902,000t in April, amid strong international demand from the biofuels sector.
“While there are multiple drivers contributing to canola oil demand, the most important is the movement towards green energy and the need for vegetable oil as feedstock for the production of renewable diesel,” Ceres Global chief executive Robert Day said.
Canada’s canola stocks fell to eight-year lows of just 6.57mn t in March, from 10.55mn t a year earlier.
Meanwhile, Canadian canola futures on the Intercontinental Exchange (ICE) have more than doubled since the start of the 2020-21 marketing year in August, breaching $1,000/t for the first time ever by 7 May, taking cues from expectations of tight global supply next year.
Canada’s rising rates of canola crushing will depend on higher domestic output. The US Department of Agriculture’s Foreign Agricultural Service forecasts Canada’s canola output rising to 20mn t in 2021-22, up by 1.28mn t from a year earlier but lower than the industry initially expected amid a smaller planted area.