The bloom's on canola this spring
Canola, of which North Dakota is the nation's dominant producer, appears primed for a good year, in part because of surging interest in soybeans. Despite inevitable ups and downs, canola has been trending higher for many years..
Pat Murphy began raising canola in 1998 and over time has become a big supporter of the crop. But he's particularly upbeat this spring.
"It's a very positive outlook," said Murphy, a Carpio, N.D., farmer and president of the Bismarck, N.D.-based Northern Canola Growers Association.
Murphy and others agree that canola acreage will rise this year, in part because extremely wet weather in the spring of 2020 cut into planted acreage. What happens in North Dakota, by far the nation's leader in canola production, will be particularly important. Fields that were too wet to plant last spring generally have dried and almost certainly will go back into production.
North Dakota farmers planted 1.55 million acres in 2020, down from 1.7 million in 2019. Despite the decline, the 2020 planted acreage was the fourth-highest ever — a sign of canola's rising long-term popularity.
This year, Murphy said, he and other board members of the Northern Canola Growers Association anticipate 1.8 million to 2 million acres of canola will be planted in the state. The increased interest has caused some popular canola seed varieties to be sold out, "but there's still seed out there," he said.
Weather-reduced planting in 2020 isn't the only reason U.S. farmers are likely to plant more canola this spring.
The soaring price of soybeans is an even bigger factor. Canola and soybeans are oilseeds, and soybean prices influence what canola farmers receive for their crop. Since the fall of 2020, canola prices have risen a little more than soybeans, Murphy said.
Such a scenario has certainly had an effect on U.S. canola prices. March cash prices for North Dakota canola are $26.20 per hundredweight. This represents a $8.15 increase from the three-year average cash price of $18.05
Asked if U.S. canola farmers can turn a profit at current prices and with good yields, Murphy said, "You sure can. You sure can," repeating himself for emphasis.
He typically raises three to four crops in any given year, and this year he is focusing on canola, soybeans and wheat.
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A relatively small 2020 crop in Canada, the nation's leading canola producer and exporter, also is in play. Canadian producers harvested their smallest crop in five years in 2020, cutting into canola supplies and helping to push up prices now. Reflecting that, seeded canola acres are expected to rise 3% this year, according to Statistics Canada, the country's national statistical office.
According to USDA: "Prices have spiked in part due to depleted Canadian canola stocks and high demand for oilseed products in China. Ongoing political tensions between the two countries has done little to stymie Chinese demand for Canadian canola products. As a result of increased Canadian canola and products exports, a drop in production, and increasing crush levels, Canadian canola stocks are expected to fall 62% this year. Such a scenario has certainly had an effect on U.S. canola prices."
China, citing pest concerns in Canadian canola, blocked imports of some Canadian canola, suspending the licenses of two prominent Canadian companies, Richardson and Viterra, two years ago. However, some other Canadian exporters are selling canola to China, according to the Canola Council of Canada.
North Dakota dominates U.S. canola production, largely because relatively cool nights in the northern part of the state favor the crop. In 2020, U.S. farmers planted 2.04 million acres, of which North Dakota accounted for roughly 3 in 4 acres.
Montana and Minnesota account for most of the remaining canola acreage. Last year, Montana farmers planted 150,000 acres of canola. Minnesota farmers 70,000 acres.
Canola "really does do well in cool-evening summers," Murphy said. "And it's just a perfect rotational crop for our cereal grains." Farmers rotate different crops on a field to enhance soil health and to hold down crop pests, among other factors.
Murphy usually raises three to four crops in any given year, and this year is focusing on canola, soybeans and wheat.
Typically, canola is planted after wheat and before corn and soybeans.
Canola originally was developed by Canadian researchers and Introduced there in 1974. The word is a contraction of "Canadian oil, low acid," or can-o-la.
It began catching on in North Dakota in the 1980s, in part because the crop disease scab was hammering durum, a popular crop at the time in northern North Dakota. In 1990, farmers in the state planted 160,000 acres of canola — a figure that rose to 1.35 million acres in 2010 and, on balance, has continued to grow since then.
Canola seeds, similar in size to poppy seeds, are crushed to produce oil and meal. Canola oil, used for cooking and frying, appeals to health-conscious consumers. Canola meal generally is fed to livestock, with most of North Dakota canola meal going to dairy cattle. A biodiesel plant in Velva, N.D., uses canola, too,
'It's just been a great crop'
Canola's popularity in parts of the region also reflects several other factors.
For example, farmers are getting better at planting and harvesting the crop, with canola usually straight-combined now, rather than being swathed before combining, saving a step at harvest. New pod-shatter resistant varieties — which limit the danger of seed pods opening prematurely before harvest and seeds falling to the ground where they can't be harvested — are particularly welcome, Murphy said.
As a result of greater production skill and improved tools, canola yields have risen substantially. Once, an average yield of 1,200 to 1,500 pounds per acre was viewed as a good harvest. Today, an average yield of 2,500 to 3,000 pound acres is considered good.
"It's been performing pretty well for us. Across the board it's just been a great crop, in northern North Dakota, especially," he said. "I look for (planted) acres to keep coming (rising)," in part because of growing U.S. consumption.
Unlike some relatively small-acreage crops, which are at risk of lower prices if too many additional acres are planted and production soars, the U.S. canola market isn't threatened by a big jump in U.S. acres, Murphy said. That's because higher U.S. production simply reduces the amount of Canadian canola that otherwise would be imported.
"I honestly don't know if we can produce too much," he said, adding that canola prices will always be tied to those of other crops grown in the United States.
Asked for advice to farmers who have never grown the crop but are interested in doing so now, Murphy said, "It's like anything else. If you haven't done it before, don't dive into the deep end with both feet. But maybe try a little bit and see what happens to you."