Strong export demand push Canada's canola prices to 13-year high $718 per ton

Canada is running short of canola oilseed six months before the next harvest due to strong export demand that drove prices to a nearly 13-year high of $718 per ton last week.

China, the top buyer, more than doubled purchases to 1.2 million tons as of December, mainly for feeding livestock.

Canola is crushed for oil to make mayonnaise, French fries, and salad dressings, while its meal is fed to pigs and other livestock.

In autumn, Canadian farmers reaped their smallest canola harvest in five years. But strong export demand in late summer prompted farmers to sell more crops earlier than usual.

Consequently, Canada, the world’s biggest canola grower was able to export nearly 33 percent more canola on-year.

Strong canola oil demand has also spurred Canadian crush plants to process brisk volumes domestically, further straining supplies.

Both crush plants and exporters may already be short canola to fulfill orders, a Canadian exporter said.

With prices so high, Canadian farmers are likely to plant six percent more this spring, said LeftField Commodity Research analyst Chuck Penner.