Australia canola production is projected to fall to 6.2M tonnes in 2026/27, a 19% decline from the previous year’s near-record 7.68M tonnes, dampened by diesel and nitrogenous fertiliser supply constraints and price increases, according to a US Department of Agriculture (USDA) report.
The conflict in the Middle East and subsequent interruption of shipping through the Strait of Hormuz had caused substantial disruption for the oilseeds sector in Australia, particularly for canola producers, the USDA’s Foreign Agricultural Service (FAS)’s ‘Australia: Oilseeds and Products Annual’ released on 6 April said.
At the time of planting for the 2026/27 crop, diesel supplies had been delayed and prices had almost doubled while nitrogenous fertiliser prices had also more than doubled, the report said.
Among Australia’s major winter crops – canola, wheat, barley and pulses – canola and wheat were the most nitrogen-intensive, according to the report.
“While supply is currently considered adequate for winter crop planting, there remains considerable uncertainty regarding availability for in-season top dressing,” the USDA said.
“In response, winter cropping producers are expected to adjust their planting programmes to reduce reliance on nitrogen-intensive crops.”
The USDA forecast a 6.8% decline in canola planted area and a 13% reduction in the national average yield.
“The decline in yield reflects both a reversion from a very high average yield in 2025/26 and more conservative fertiliser application during the growing season. Expected yields of 9.5% are below the five-year average but still 7% above the 10-year average,” the USDA said.
Australia remains the world’s second-largest canola exporter behind Canada and has accounted for roughly one-third of global trade in recent years, according to the report.
With production down, canola exports were expected to drop by 16% to 4.7M tonnes.
Canola oil exports were expected to increase marginally to a record 300,000 tonnes, while domestic consumption was projected to rise modestly, largely in line with population growth.
Canola meal production was forecast to remain stable at 754,000 tonnes, with the bulk consumed domestically and exports steady at 60,000 tonnes.
Crushing volumes were expected to remain stable at 1.3M tonnes.
Recent growth in canola production, combined with elevated global canola oil prices in 2021 and 2022, had encouraged increased investment in Australia’s canola processing sector and, as a result, existing processors had expanded capacity, lifting the baseline level of domestic consumption from 2025/26 onward, the USDA said.
“Australia’s total industry crushing capacity is now estimated at approximately 1.6M tonnes,” the USDA said.
“This expanded capacity requires higher throughput to achieve optimal plant utilisation rates, which continues to underpin demand for canola seed for crushing.”
Australia’s position as a major supplier of canola to the global market provides flexibility to respond to shifting demand patterns, according to the report.
“The evolving situation in the Middle East, particularly its impact on energy markets, may increase demand for canola as a biodiesel feedstock, potentially reshaping export destinations during the forecast period,” the USDA said.
