Aussie Canola reaping rewards of Euro biofuel boom
Canola prices are already breaking records this year, but a new industry report predicts they could climb even further in the next decade.
Emissions policies in Europe and North America are expected to lift demand for oilseed, particularly canola, as they move to phase out fossil fuels and increase their use of biodiesel.
Drought in Canada, the world’s biggest exporter, has dramatically reduced global supply. Combined with the increased demand from Europe, this has seen prices soar 23.5 per cent and edge towards the $1000 per tonne mark.
“This will present opportunities for Australian canola exports,” report co-author, agriculture analyst Dennis Voznesenski said.
“In our base case outlook, these are modest initially, but grow as a result of structural shifts in the global industry.”
Fuel produced from Australian canola emits half the greenhouse gas of fossil fuels and can be used in existing diesel engines without modifications.
Australian growers nearly missed out on this opportunity when, in 2017, the EU threatened to close its ports to Australian canola unless it could be proven to be a low-emissions variant. A CSIRO report was submitted just in time, securing a $1 billion market.
To meet demand, Australian production has risen 11.3 per cent from last year, taking up a further 600,000ha and exporting 500,000 tonnes more than 2020-21.
Global production is expected to lift for the 2022-23 season. However, Canada’s exportable surplus is expected to decrease. Mr Voznesenski said “In 2024-25, we expect new Canadian crushing capacity to come online ... this will reduce Canada’s exportable surplus, primarily to price-sensitive markets in Asia and Mexico, but also to Europe.”
The EU is also poised to phase out palm oil in its biodiesel production. Mr Voznesenski said: “Even under favourable European growing conditions, we could see EU import demand for canola then rise to levels similar to those of recent drought years.”
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