Southern Dirt Updates

As canola prices break records in 2021, Australia’s canola industry has the potential for sustained upside ahead with policies to curb emissions in North America and Europe expected to lift global demand for oilseeds – and in particular canola – through to 2030, according to Rabobank grains and oilseeds analyst Dennis Voznesenski. And this will present opportunities for Australian canola exports. 

In Rabobank’s recent report Global Canola Opportunities in the Sustainable-Fuel Future: Is Australia fit and ready? Mr Voznesenski says it will be modest initially, but will grow as a result of the structural shifts in the global industry – namely Canada’s falling exportable surplus in 2024/25 and then from 2026/27 onwards due to the EU’s increasing canola import needs. 

“In the current 2021/22 season, global supply of canola has been severely reduced by drought in Canada and by continued heavy EU import demand,” he says. “And this has been benefiting Australia and other exporters.” 

Mr Voznesenski says domestic canola prices are starting to break the A$1000 a tonne mark for non-GM canola, while overseas markets broke through that level earlier in the year.  

“A substantial lift in global canola production is expected next season,” he says, however, in 2024/25, new Canadian crushing capacity is expected to come online to supply a growing renewable diesel sector across North America, and this will reduce Canada’s exportable surplus. 

“Then from 2026/27 onwards, we expect sizeable reductions in the use of palm oil as a feedstock for biodiesel in EU countries as it is phased out to meet the Union’s sustainability commitments. The feedstock gap created will deliver an opportunity for even greater use of canola in the EU.”   

Just how much Australian canola, and canola prices, will benefit, however, will depend on a number of variables, he says. These include how quickly the EU phases out palm oil in biofuels and how much Canadian canola exports drop, as well as how much global production grows and what additional sustainability requirements may be placed on Australian canola. 

“While the road to 2030 for canola contains many uncertainties, we can be sure the global exportable surplus is on a downward trajectory,” he says. “And this will create opportunities for Australian canola.”  

In years when global production significantly underperforms, which it inevitably will, Mr Voznesenski says shortages will result in even greater opportunities.  

“However, Australian canola will need to ensure it is ‘fit’ to take advantage of these future export opportunities over the course of the next decade, in particular in meeting the sustainability credentials which will be required in export markets.” 

To find out more about other Rabobank research, contact Rabobank Bunbury on 08 9726 7100 or subscribe to RaboResearch Food & Agribusiness Australia & New Zealand on your podcast app.