The soya bean is the primary crop in the oilseed market. In 2006 it accounted for more than half of total oilseed production (224.6 million tons). Canola was in second place, representing 12% of production. Oilseed production fell in the 2006/07 financial year for the first time after having increased for each of the previous ten years. This may be due to a fall in soya bean cultivation in the U.S.A.

Most soya bean stocks are held in Brazil and Argentina. These two countries have long since outstripped the U.S.A. in soya bean cultivation. China is the fourth largest soya bean producer. However, its requirements have risen by 6% on last year, and China has to import to meet this need. Soya consumption in the EU is rising too, especially for use in biodiesel, and this demand is met by imports.

France and Germany are reaching the limits of crop rotation with canola

The major producers of canola are the EU-27, China, India and Canada. The increase in acreage led to a record canola harvest in 2007/08: 49.8 million tons. However, total consumption is estimated at 50.3 million tons. This means that canola stocks will continue to shrink.

Extreme weather conditions caused yields to be disappointing in Europe. Experts predict poor harvests in Germany and France for the next few years as well. The large proportion of land given over to canola production has already started to put pressure on normal crop rotation practice in some regions, possibly leading to an increased infestation pressure of diseases and lower yields.

It is interesting to note that the EU's processing capacities are being steadily expanded by the construction of new oil mills. The EU will no longer be producing enough canola to utilize its own oil production capacities to the full.

Canada is the major player on the canola export market

Canada is the world's largest exporter of canola, shipping 5.8 million tons in this financial year. Despite a strong expansion of capacity this year, the harvest was only 9.2 million tons as a result of poor weather conditions. Processing capacity within Canada has increased to 3.6 million tons. Taken together with the country's high export volumes, Canada's canola stocks have fallen sharply. Australia is another major canola exporter, but poor yields have hit its potential to export. Canola production in Ukraine and the CIS states has doubled within a year.

Stocks will continue to fall and the markets are set to remain volatile

Tight supplies and rising world demand have led to high, sometimes record, prices for oilseeds and vegetable oils. Consumption outstrips production in all sectors, causing stocks to shrink. The struggle for arable land will intensify. Cereals and oilseeds are in competition. The outcome will determine commodity prices and operating costs. Price will determine whether in the future oilseeds and cereals end up in the food chain or are used for energy production.