Given the challenges facing producers -- sharp increases in fertilizer costs and supply concerns and moderate to severe drought impacting much of the southwest Canadian Prairies -- it would be understandable if many are considering a switch from canola to a cheaper crop to grow. According to the April update from Agriculture and Agri-Food Canada (AAFC), that may be worth a second thought.

In a nutshell, current record canola crush margins are combining with increased crush capacity (as another plant comes online) to result in another increase in domestic use compared to previous predictions. Ending stocks for the coming crop year are now expected to fall to minimum pipeline levels as a result and may even require export demand rationing.

More specifically, in the April update, AAFC increased its estimate of domestic crush (or Feed & Industrial Use) by another 500,000 metric tons (mt), to a record setting 13 million metric tons (mmt). The 2025-26 crush total was left unchanged at 12 mmt compared to 11.412 mmt of canola crushed in 2024-25.

The official opening of Cargill's one-mmt annual capacity canola crush plant in Regina may have contributed to the increased estimate. Record-setting canola crush margins almost certainly made a difference as well with the ICE calculation exceeding $350/mt again Tuesday thanks to surging soybean oil values. For more, see last week's post at https://www.dtnpf.com/….

On the other hand, even with a 100,000-mt increase in the 2026-27 canola export estimate in April, the annual total is still expected to fall from the previous year. At 7.8 mmt for 2026-27 compared to 8.2 mmt in 2025-26 and 9.331 mmt of canola exports in 2024-25, it appears demand rationing will be required given the improved outlook for normal trade with China going forward.

As a side note, China started importing Canadian canola even before the rollback in anti-dumping duties took effect. In February, they were shipped 114,223 mt of canola in anticipation of the March changes, according to Statistics Canada. Given the CGC weekly grain statistics report showing consistently strong canola exports since, they have more than likely continued taking significant amounts.

The limitation of exports will likely be required, given canola ending stocks are already forecast to fall to 1.064 mmt compared to last month's AAFC estimate of 1.660 mmt, a significantly tighter carryover level. And as you can see from the accompanying chart (in orange), if realized, it will be the lowest ending stocks level seen since the 2012-13 crop year. And even lower on a stocks-to-use basis.

It's worth noting the supply side assumptions are based on production projections using Statistics Canada's estimates of principal field crops, released March 5, which were based on a survey taken between the end of December and start of January. Given the number of changes seen since then -- from the lifting of (most of) the China anti-dumping duties, to a final biofuel blending mandate ruling that was much more supportive for the demand for feedstock than expected (increasing demand in the U.S. for canola oil among other alternatives), to increasing projected costs for fertilizer and fuel due to the Iran war, to increased drought concerns -- it will be surprising if final seeded area remains unchanged from the March estimate. The most important factor will be whether acres increase or decrease from that point. And that's where the market needs to step up and make sure canola prices are attractive enough to retain (or expand) acres.

For reference, Statistics Canada estimated 2026 canola seeded area at 21.839 million acres (in March) compared to an average pre-report estimate of 22.3 million. That would only be slightly higher than the 2025 level of 21.623 million acres but below 2024's total of 22.011 million acres. A final principal field crop area report will be released by Statistics Canada on June 30.

I welcome feedback along with any suggestions for future blogs. My daily comments can be found in Plains, Prairies Opening Comments and Plains, Prairies Quick Takes on DTN products.

Mitch Miller can be reached at mitchmiller.dtn@gmail.com

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