Canola prices, basis nearest Winnipeg futures, spiked higher in mid-2002, the advance carrying from about $320 (Canadian) per metric ton to almost $460 towards yearend before a moderate retrenchment took hold. The strength reflected both a smaller than expected 2002 world crop and carryover.

World rapeseed production has shown little increase since the late 1990's following steady gains earlier in the decade. Production (canola or rapeseed, the terms are interchangeable) in 2002/03 declined to 32 million metric tons from 35.9 million in 2001/02 and the record high 42.4 million in 1999/00 and a mid-1990's average of about 30 million. On a protein meal basis, rapeseed is the world's second largest meal, production of which totaled 18.5 million tons in 2002/03 vs. 20 million in 2001/02. For oil, however, rapeseed ranks third (after soybean and palm) with production of 11.3 million tons in 2002/03 vs. 12.2 million in 2001/02 and record large 13.6 million in 1999/00. World rapeseed supplies in 2002/03 of about 34.4 million tons compares with over 38.5 million in 2000/01, the latter including a carry-in over more than 2.4 million tons. The world 2002/03 (July/June) crush of 30.6 million tons compares with the previous year's 33.3 million and the record high 37 million in 1999/00. The ending world 2002/03 carryover is estimated at 1.3 million tons, the smallest since 1997/98."

Collectively, the European Union is the largest producer with 9.2 million tons in 2002/03 vs. 8.9 million in 2001/02 and a late 1990's average of about 9 million tons. Germany is generally the largest producer within the EU. China is the world's largest single producer with 10.5 million tons in 2002/03 vs. a near record large 11.3 million in 2001/02 and late 1990's average of 9.4 million. Canada follows, but with only a record low 3.3 million tons vs. 5 million in 2001/02 and 7.2 million in 2000/01. Although China has increased rapeseed acreage in recent years, average yield has failed to show much improvement and is less than half than realized in Western Europe. In terms of protein meal consumption, E.U. 2002/03 rapeseed meal consumption of 5 million tons is about one-sixth of soybean meal. EU estimated rapeseed oil usage, however, in 2002/03 of 3.2 million tons is nearly twice that of soybean oil. Between the two products, oil has shown the greater percentile growth in recent years. Foreign trade in rapeseed is a distant second to soybeans: exports of 6 million tons in 2002/03 compare with 7.5 million in 2001/02 and almost 10 million in 2000/01.

U.S. production of canola seed is small in absolute terms, but percentage wise increased rapidly in the past decade. The crop is grown mostly in the Northern Plains states. Production in 2002/03 (June/May) of 1.6 million pounds in 2002/03 compares with 2.0 million in 2001/02. Harvested acreage has increase sharply, to almost one million acres in 2002 vs. about 500,000 in the previous two years, but average yield per acre has held around 20 bushels per acre since the late 1990's. Contributing to the gains in U.S. production include: (1) government incentives to increase acreage; (2) development of better varieties that can be grown in the U.S. and (3) the wider acceptance of canola oil in cooking owing to its lower content of saturated fats. Canola oil is said to be 94% saturated fat free, the lowest of any leading oil. Demand for canola meal has also grown as a livestock feed.

U.S. Canola oil production (October/September) has hovered around 600 million pounds during the past few years, but still more than ten times greater than in the early 1990'a. Meal production has shown similar growth. For oil, the absolute gain in domestic usage nearly doubled during the 1990's, but the percentage gain in exports was even greater. The average Midwest canola oil price in 2002/03 was forecast at 21.25-24.25 cents/lb vs. 18.75 cents in 2001/02; for canola meal, the prices were $147-177 per short ton and $143, respectively. Rapeseed prices, basis Hamburg, in 2001/02 averaged $220

per metric tons the previous ten year average of $251; Rapeseed meal prices were $129 and $144 per m/ton while Rotterdam rapeseed oil prices in 2001/02 of $451 per ton compare with $372 in 2000/01 and the 1991/92-00/01 average of $503.

Futures Markets

Canola futures and options are traded on the Winnipeg Commodity Exchange (WCE). Rapeseed futures are traded on the Marché a Termé International de France (MATIF).

Excerpted from the CRB Commodity Yearbook. For more information on CRB products click here

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