UFOP: US biofuels policy causes Canada’s oilseed processing to grow
In Canada, rapeseed/canola demand from domestic processors continues to rise.
Above all, firm demand for canola oil and meal is likely to result in less seed being available for export.
The International Grains Council currently estimates Canadian rapeseed production at 22.1 million metric tons in 2026-’27.
This leaves production close to the previous year’s level, but at the same time around 600,000 tons above the September estimate.
However, the further course of the weather remains decisive for the final outcome, as harvesting in Saskatchewan and Alberta still lagged well behind the usual pace in the first half of the month.
On the demand side, domestic consumption in Canada is set to rise sharply.
The IGC projects this at 14.5 million tons, compared with 13.1 million tons the previous year.
This is primarily due to expanded processing capacity and continued strong demand for canola products.
Germany’s Union zur Förderung von Oel- und Proteinpflanzen e. V. (UFOP) said it sees this as evidence of the importance of the ambitious support policy of the U.S. government regarding biofuels.
The Canadian oilseed sector is among the beneficiaries of this policy.
The revised U.S. 45Z tax credit took effect in early 2026.
At the same time, the new U.S. regulations restrict global feedstock imports, allowing only those from Mexico and Canada to be eligible for the credit.
In addition, the new provisions for calculating greenhouse-gas intensity for biofuels from cultivated biomass increased the attractiveness of canola oil for biodiesel and renewable diesel production.
The rising domestic oilseed processing, however, limits the availability of rapeseed for export, according to research by Agrarmarkt Informations-Gesellschaft (AMI).
Accordingly, Canadian rapeseed exports are likely to decline to 7.8 million tons in 2026-’27, following 9.1 million tons the previous year.
Canada thus remains one of the most important suppliers on the world market but is nevertheless expected to lose market share in view of increasing domestic processing.
