Canada Farmers Seen Defying Oilseed Rally, Slashing Canola Acres

(Bloomberg) -- Surging fertilizer costs and fear of drought are keeping Canadian farmers from planting more canola, despite record prices and growing demand.

Acres of the oilseed, used in everything from salad dressings to deep frying, will probably decline 2.7% from a year earlier to 21.9 million, according to a Bloomberg survey of eight analysts. The biggest drop since 2019 comes as canola futures are trading near all-time highs amid strong demand and disrupted trade flows from Russia’s invasion of Ukraine.

Farmers aren’t “going to push the acres this year,” said Tony Tryhuk, the branch manager of RBC Dominion Securities in Winnipeg, Manitoba, “whether it’s the fertilizer costs or back-to-back years of drought.”

Canada is the world’s largest canola grower, and last year supplies shriveled after a drought cut output to the lowest since 2007. Farmers moving away from canola may shift more acres into wheat and soybeans, Tryhuk said.

Statistics Canada will release its estimates on Tuesday at 8:30 a.m. in Ottawa.

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