Canola, a low-acid cultivar of rapeseed which was developed in Canada, and largely considered as Canada’s most valuable oilseed, as the total value of annual exports of canola seed oil and meal is more than three billion dollars. The Canola Meal obtained after crushing of the canola seed, is used commonly in animal feed due to its protein content of 36-38%. Canada is the world’s largest exporter enjoying a mammoth share nearly 50% in the world canola meal trade.
Historically, soybean meal has been the most common protein source in poultry and cattle feed production. Due to increase in feed costs, nutritionists are looking for alternatives in their feed formulations. A study at the University of Nevada and University of Wisconsin supports canola meal as an exceptional protein source and alternative to soybean meal.
Additionally, increased production of canola in recent years has also led to a greater availability of canola meal as a protein supplement in livestock diets.
Biggest consumer or importer of Canadian Canola meal is the United States, followed by Mexico, Ireland, Taiwan, Indonesia, Thailand, China and Vietnam. The United States is a regular market for more than 60 per cent of the canola meal produced in Canada.
On the other hand the major buyers of Indian rapeseed meal are Bangladesh, South Korea, China, Malaysia, Philippines, Taiwan, Indonesia, Japan, Singapore, Thailand and Vietnam. Due to absence of derivate market for canola or rapeseed meal, traders and exporters have to use canola and rapeseed futures, in order to hedge their price risks.
The demand trends for Canadian Canola is usually set by North America and Asia, but there is constant rise in demand, owing to increasing importance of the health properties such as canola oil is lowest in saturated fats, great ratio of omega-6s to omega-3s, and high in heart-healthy monounsaturated fats.
Crushing of canola seed produces approximately 40% canola oil and rest 60% canola meal. The meal is used in the feed ration of cattle, swine, poultry, and specialty animals (horse, sheep and aquaculture). Studies have revealed that canola meal is worth, on a unit weight basis, 65 to 70 per cent of the value of 44 per cent protein soybean meal for feeding poultry and about 70 to 75 per cent of the value of soybean meal for feeding swine and ruminants. This inference is based on nutrient content alone.
In near future, there might be further increase in demand of canola meal.
- In EU region, due to deficient in protein feed the consumption of rapeseed meal replacing imported soybean meal has grown quite significantly
- Due to rapid economic development in China and sharp expansion of protein manufacturing plants, consumption of canola meal has improved
- Rising interest of milk producers also resulted in constant growth of rape meal markets in USA.
- The meal consumption has also been improving consistently in countries like Iran, Vietnam and Indonesia
Looking at the demand scenario, it can be concluded that rapeseed or canola meal usage is most likely to increase manifold, hence average price of oilmeal should remain firm in years to come. This situation might be beneficial for reducing the price gap of other oilmeals.
The situation has turned critical for India, as the country is steadily making a shift in its position from influential exporter in Global oilmeals market to net importer. Lesser availability of oilseeds for crushing and crushing disparity has affected nearly 15,000 oilseed crushing units to operate only at 20-30 per cent of their capacity of 36 million tonnes of edible oils.
As observed by market leaders, higher minimum support prices (MSP) fixed by the government and consistently lower edible oil prices in the international market has made it cheaper to import refined oil, and making India out priced by $140-150 per tonne in the global oilmeal market. Two successive years of drought have led to lower output of soybean and rapeseed, hence adversely affecting oilmeal market.
India’s oilmeal export share has fallen also due to stiff competition from China and Argentina, since it diverted traditional buyers such as Japan, Iran, Thailand, Indonesia, Taiwan and Vietnam to avoid purchasing from India. A ban on oilmeal import by China (in 2011), and Japan’s move decision to import genetically modified (GM) seed meal has also badly affected the Indian exports.
As observed in the table 1, the price trends of domestic rape meal has been more or less on the upward in last one year. Firming prices of rapeseed and lower oilmeal production in the country has been supporting the market.
As observed in table2, average prices of Canadian Canola Meal have been moving upwards except in 2015.
The data prepared by the Solvent Extractors’ Association (SEA), explains that India’s oilmeal exports have dropped by slightly more than 90% in January 2016 to 17,243 tonnes, which has been the lowest ever figure. The country’s export share in the world oilmeal market in 2012-13 stood at nearly six per cent and the share has been reduced to less than two per cent in 2014-15. Considering the growing importance of rapeseed/canola meal in the animal feed rations, the oilseed imports might prove beneficial for the industry. As it would lower the need for edible oil imports, and also enhance rape meal supply in the country to balance the local feed consumption.
by Abhijeet Banerjee, Religare Commodities