Australia canola exports on track to exceed targets

Australian canola exports this season are on track to exceed official targets for the 2021-22 marketing year amid strong shipments to Europe and as some key buyers of Canadian canola have partially opted for Australian crop following a poor harvest in Canada.

Australia's canola shipments totalled 339,300t in July, according to latest available data from the Australian Bureau of Statistics. This brought total exports since the start of the 2021-22 marketing year to 5.2mn t, up sharply from 3.37mn t at the same time a year earlier.

With 182,000t of canola lined up for export in August and 260,000t so far this month, Australia's shipments of crop in 2021-22 would reach at least 5.64mn t. This suggests, even in case of no exports in October, that Australian exports would already exceed the US Department of Agriculture (USDA) expectations of 5.3mn t for this marketing year (November-October). They would also be above Australian Bureau of Agricultural and Resource Economics and Sciences (Abares) projections of 5.56mn t for 2021-22.

This comes as Australian canola exports remain strong despite the marketing year coming to a close, contrasting with trends seen in previous years. July volumes were at their highest for the month in at least 10 years. Lined-up volumes for August and September also suggest they would be at their highest for the period since at least 2012.

Australian canola exports saw strong demand from Europe in particular, with cumulative shipments to the EU totalling 3.39mn t in November 2021-July 2022. Europe's poor canola harvest in 2021-22, paired with declining availability of oilseed supply from Ukraine, sunflower in particular, has prompted the bloc to opt for alternative canola origins.

Europe's interest for Australian crop also coincided with a poor canola harvest in Canada — the largest supplier of crop globally in 2021-22. The nation's canola production hit a multi-year low of 13.76mn t in 2021-22 from 19.48mn t a year ago, weighing on its exportable surplus.

Poor Canadian production also pushed key importers of crop to Australian origin. In November-July, Australia exported 542,000t of canola to Japan, up from 75,000t a year ago, while Canadian shipments to the destination fell to 1.02mn t from 1.75mn t in 2020-21.

And in the UAE, Australia overtook Canada as the main supplier of canola, having shipped 564,000t to the destination over November-July, compared with 126,000t shipped by Canada.

Australia in July also shipped its first canola cargo to Mexico in at least 10 years, with some 43,000t exported to the destination.

With La Nina weather forecast for the rest of 2022 and higher acreages on the year, Australia is expected to have another bumper canola harvest in 2022-23, pegged at 6.64mn t by Abares, only marginally below 6.76mn t a year earlier. This suggests that Australia could continue to compete with Canada in key import markets despite expectations of a recovery in Canadian production.

By Bilal Muftuoglu