14/05/2026 (The Western Producer) - The pace of canola exports and domestic use is running better than expected, and if the trend continues, the carryout at the end of the crop year might not be as burdensome as was expected.

The size of the crop is record large and would require robust exports and domestic use to avoid a burdensome carryover.

A dark shadow was cast on demand forecasts as China levied an 84 per cent tariff on imported Canadian canola seed, as well as 100 per cent tariffs on meal and oil.

However, negotiations and concessions regarding electric vehicle trade prompted China to lower the tariff on seed to about 15 per cent and to fully eliminate the tariff on meal as of March 1.

This improved the outlook for total use.

Accumulated seed exports this crop year still run well behind last year’s pace but are a little better than expected.

However, domestic use is running well ahead of last year’s pace.

The latest export report from the Canadian Grain Commission is for week 38 of the crop year, which is almost three-quarters of the year.

Accumulated total canola seed exports are almost 6.21 million tonnes. If exporters were able to continue that pace to the end of the 52 week year, a total of 8.72 million tonnes would move.

That is about 500,000 tonnes better than the 8.2 million tonne forecast in Agriculture Canada’s April monthly supply and demand report.

The picture for domestic use is better than that.

To week 38, 9.12 million tonnes have been processed, almost five per cent more than at the same point last year, according to the grain commission figures.

If that pace continues to the end of the crop year, the total processed would be 12.81 million tonnes.

That is 800,000 tonnes better than the 12 million tonne Agriculture Canada April forecast.

With that information, it is not a stretch to consider Agriculture Canada’s forecast for a burdensome 2.756 million tonne carryout to be too high.

There is reason to hope that the carryover might wind up closer to last year’s 1.6 million tonnes.

Of course, that also depends on whether the current estimate of last summer’s production, at 21.8 million tonnes, is correct.

In recent years, the July 31 end-of-crop-year accounting has often revised the production estimate higher.

A supporting factor for hope that exports will turn out better than expected is the strong performance in March, the most recent Statistics Canada data on exports.

A total of 992,088 tonnes were exported.

That was the strongest movement in one month since October 2024.

After almost no exports to China earlier in the crop year because of the tariff, movement to that country bounced back strongly in March, at 368,973 tonnes, or more than one-third of the total.

Seed exports to Japan, at 268,903 tonnes, were also the strongest one-month total since November 2018.

There were also good exports to Pakistan, Germany, the Netherlands, Mexico, United Arab Emirates, the United States and Bangladesh.

As for domestic crushing, the 1.097 million tonnes in March was a near record for one month, surpassed only by October 2024.

April will almost certainly top a million tonnes of crush.

There is a strong incentive to process as the crush margin is at a record high, driven by fast rising vegetable oil values.

Soybean oil futures rose more than 50 per cent since Jan.1, while canola futures climbed about 20 per cent and soybeans only about 13 per cent.

The vegetable oil rally is driven largely by its use in biofuel and crude oil’s 80 per cent rally this year driven by the U.S.-Iran war that has virtually closed the Strait of Hormuz.

The vast majority of the meal and oil produced by Canadian crushers is exported, with around 87 per cent of meal exported and about 65 per cent of oil.

In both cases, the U.S. is the main buyer.

China’s tariff on meal precluded exports there until the tax was lifted March 1, allowing a small amount to be shipped to China that month.

It has been good to see that the canola meal export market is diversifying a little, with some small sales to Thailand, Vietnam and Indonesia.

The high crude oil price is prompting policy changes in palm oil producers Indonesia and Malaysia.

Malaysia in June will require diesel to have 15 per cent palm oil content, creating demand for about 1.5 million tonnes of the vegetable oil.

Indonesia is going further, raising its diesel-palm blend to 50 per cent from 40 per cent starting in July, resulting in an expected demand for an additional 1.5 million to 2.2 million tonnes of palm oil.

This should support palm oil prices, which in turn support other vegetable oils such as canola and soybean.

https://www.producer.com/markets/improving-canola-demand-should-shrink-year-end-stocks/