2020-21 Canola Stocks Larger than Expected

Canola ending stocks for the now-concluded 2020-21 marketing year were down sharply from the year-earlier level, but the fall was not nearly as steep as expected.

A Statistics Canada grain stocks report on Wednesday pegged national canola stockpiles as of July 31 (ending stocks for the 2020-21 crop year) at 1.76 million tonnes, down 48.6% from the previous year’s 3.43 million and the lowest since July 2017 (1.34 million). However, the StatsCan estimate came in far above Agriculture Canada’s August projection of just 700,000 tonnes, which would have translated to a year-over-year decline of nearly 80%.

Part of the higher July 31 stocks number can be attributed to an upward revision in the 2020 crop, which is now estimated at 19.484 million tonnes, compared to the previous StatsCan estimate of 18.72 million. But amid heavy demand and dwindling supplies, it also appears strongly higher prices did the job of slowing demand. Total canola usage between March 31 and July 31, 2021 amounted to 5.97 million tonnes, down 1.45 million from the same period in 2020.

Regardless of the reasons for the surprisingly high 2020-21 canola ending stocks estimate, there is now a larger supply available to cushion this year’s drought-reduced crop, which StatsCan last week estimated at 14.74 million tonnes.

In its accompanying commentary, StatsCan said the year-over-year decrease in 2020-21 canola ending stocks was a result of lower on-farm stocks, which fell 50.3% to 1.1 million tonnes. Moreover, commercial stocks fell 45.6% to 704,000 tonnes.

On the demand side, canola crushing in 2020-21 increased 2.8% to a record 10.4 million tonnes as world demand for vegetable oils remained high. At the same time, canola exports rose 4.9% to 10.5 million tonnes, due to strong global demand. The export increase was largely due to higher shipments to China, which rose by approximately one-third from a year earlier.

In the largest production province of Saskatchewan on-farm canola stocks as of July 31 were estimated at 252,000 tonnes, down 63.7% from the previous year’s 696,000. At 730,000 tonnes, Alberta on-farm canola stocks were down 300,000 tonnes or 29% from a year earlier, while Manitoba farm stocks tumbled 83.7% tyo just 66,000 tonnes.