Last week we looked at the World Agricultural Supply and Demand Estimates (WASDE) in terms of wheat and corn. This week attention turns to oilseeds, with supplies seemingly continuing their never-ending growth.
There has been plenty of talk locally about the canola price premium to cereals, and how it’s likely to drive canola production again this year. It is not just happening here, with global oilseed production expected to increase again in 2026-27.
Figure 1 shows global oilseed production is expected to post yet another record, increasing 2.8% to 718mmt. Growth in oilseed production has been remarkable over the last 15 years, as it has gone from steady, at around 400mmt, to over 700mmt expected this year, which is an 80% lift.
Oilseed stocks are expected to remain steady in 2026-27, as consumption grows to match production. This year, demand from the biofuels sector will likely be responsible for using up any extra supplies.
It is largely soybeans which account for the increase in oilseed production, with the US, Brazil and Argentina, the big three producers, responsible for much of the increase. Given the dry weather in the US, the crop is far from assured, so there is room for production cuts from the current highs.
Australian croppers are more interested in canola, which is also expected to see stronger production this year, but only by a margin of 1.4%. Figure 2 shows rapeseed production is expected to hit another record, but consumption is expected to grow by 5%, meaning the stocks to use ratio is expected to remain steady.
With global demand rising, and prices already relatively strong, there is some real upside if there are any production issues for any major exporters. The US soybean crop was only 49% planted last week, so there is plenty of time for things to go wrong before the forecast record production is in the silo.
What does it mean?
The last time we saw oilseed production fall was in 2018-19, so they are going for an eighth straight year of growth. It is very early in the production cycle, so yields can vary greatly from here, and given strengthening demand, it might pay to wait for pricing opportunities on the canola front.
Key Points
- Oilseed production is expected to grow again in 2026-27 to another record high.
- Consumption of oilseed will be boosted by biofuel demand, leading to a tight balance sheet.
- Any production issues could see strong rallies in oilseed prices over the coming months.
Click on figure to expand
Click on figure to expand
Click on figure to expand
Data sources: MLA, ABS, Mecardo
