Adverse weather conditions in Europe this winter will likely cut into rapeseed production in the region, which would provide some indirect support for the Canadian canola market.
"Any loss in Europe would tighten up world supplies… which would support our prices," said Chris Beckman, oilseed analyst with Agriculture and Agri-Food Canada’s market analysis division in Winnipeg.
Rapeseed is grown as a winter crop in Europe and Ukraine, and reports of cold temperatures over the winter months have led to increased concerns of winterkill, according to reports from the region.
The five-year average for European Union rapeseed production is 19.5 million tonnes, according to data from the European Commission’s Directorate General for Agriculture and Rural Development.
A February outlook from the department forecast rapeseed production in 2012 at 20.2 million tonnes. However, private analysts have estimated that production could end up as low as 18 million due to winterkill.
Beckman said it was still too early to say how severe the losses will be, but some reductions to the crop were expected given the winter weather.
Europe produces about a third of the world’s rapeseed/canola, which means production problems there can have a major impact on the international market.
While Canada does not export much canola seed to Europe directly, difficulties there would see more Black Sea-origin and Australian supplies diverted into Europe, said Beckman.
In that scenario, Canada would face reduced competition into the Asian marketplace.