China bought twice as much canola as the USDA had forecast for the year

According to USDA estimates, in the current agricultural year, rapeseed imports to China will amount to 5.1 million tons, although in January it was forecast within 2.5 million tons, The Western Producer reports.

This inaccuracy of the forecast is explained by the publication's analysts by the fact that "in the list of tasks of the USDA, rapeseed supplies are in the last 10% of the list", so the January forecast was a preliminary figure that had to be revised as new data became available.

China's increase in imports is also driven by a recovery in production in Canada and a record harvest in Australia in 2022. According to the Canadian Grain Commission, in FY 2022/23, the country exported 4.71 million tons of canola to China, compared to 1.22 million tons in FY 2021/22. Against the backdrop of a record crop of 8.27 million tons harvested in 2022, Australia has significantly reduced rapeseed prices for China.

The increase in rapeseed imports was also facilitated by the increase in demand and prices for vegetable oils. "When oil prices are rising and flour prices are falling, canola has a significant advantage, as it contains much more oil than other crops, including soybeans," analysts of the publication explain.

The USDA forecasts that China will import 3.4 million tonnes of canola in FY2023/2, which would be in line with the 5-year average, and analysts at The Western Producer agree with these estimates.

The dynamics of prices for vegetable oils will be determined by the production of palm oil in Malaysia and Indonesia, which may significantly decrease against the background of the manifestations of the El Nino weather phenomenon.