Dreyfus bullish on Canadian canola

Solid demand and tightening supplies will require a considerable increase in Canadian canola acres this spring, Louis Dreyfus’ Canadian canola trading manager told a conference here Monday.

"We truly require 21 million acres to meet the demand," Tracy Lussier of Louis Dreyfus Canada told the Wild Oats Grainworld conference. That would be up by more than two million acres from the previous year and would represent a new record.

A favourable price spread for canola over other cropping options, particularly wheat, was behind the expectation for increased canola acres, he said.

However, wheat acres should also be up on the year, due to expectations for a decline in summerfallow.

The Calgary-based Canadian arm of the French grain merchandising and trading firm is forecasting canola ending stocks at the close of the current 2011-12 marketing year at the very tight level of 477,000 tonnes, which would compare with 1.718 million the previous year.

Lussier said the market will be working to ration some of the demand, but the fact that large sales are already on the books will keep supplies very tight by the end of the year.

Exports and the domestic crush are both running at a record pace, and Lussier expected they would remain strong in 2012-13, keeping the fundamental outlook bullish for canola.

Dreyfus forecasts total Canadian canola exports in 2011-12 at 8.666 million tonnes, which compares with 7.004 million in 2010-11. For 2012-13 Lussier estimated exports at 8.425 million. China accounts for most of the increase in demand.

Canada’s domestic crush is forecast at 6.8 million tonnes in the current marketing year, up from 6.31 million in 2010-11. With the industry expanding, Lussier said the crush would surpass seven million tonnes in 2012-13 and rise to eight million in subsequent years.

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