USDA Oil Crops Outlook for 2023-24

Mississauga, ON – May 1, 2024   — In recent weeks, the canola market has shown signs of growth despite the absence of significant developments in the vegetable oil sector. Soybeans, palm oil, and European rapeseed have maintained stability or experienced slight increases during this period. Notably, the canola market witnessed significant drops on April 11 and April 15, followed by a notable rebound on April 22, marking the largest daily gain since November. While the new crop November contract remained relatively stable over the past two weeks, the May and July contracts experienced a slight retreat of nearly two percent.

According to the latest USDA Oil Crops Outlook for 2023-24, the forecast for U.S. canola crush stands at 4.6 billion pounds. February’s crush reached a record high of 410 million pounds, reflecting an 11 percent increase compared to the same period last year. Canola oil production has risen by 28 million pounds to reach 1.9 billion pounds. However, this increased production has not been adequate to meet the strong domestic demand for canola oil, particularly in biofuel production.

In January, a record-breaking 376 million pounds of canola oil were utilized as feedstock in biofuel production, according to USDA data. The most recent Monthly Biofuels Capacity and Feedstocks Update from the U.S. Energy Information Administration (EIA) indicates that nearly 60 percent of canola oil used in biofuels was consumed in renewable diesel production, with usage increasing from 124 million pounds in September to 224 million pounds in January.

Previously, it was suggested that USDA may need to revise its U.S. canola oil usage forecast for biofuels from 3.6 billion pounds to 3.8 billion pounds due to higher usage levels reported by the EIA. However, USDA has now raised the forecast even further in this month’s Oil Crops Outlook to a record-high of 4.0 billion pounds. This will increase the portion of canola oil used for biofuels to nearly 45 percent, up from previous forecasts of 40 percent.