Biodiesel demand boosts market for poor canola
The competition for off-grade canola is more fierce than usual, says a buyer of the crop.
Milligan Biofuels is in the market for 60,000 to 70,000 tonnes of heated or green canola to fuel its recently expanded biodiesel plant in Foam Lake, Sask.
Company president Joe Holash said that shouldn’t be difficult to find, considering about eight percent of the crop, or one million tonnes, ends up in the sample category in a typical year.
However, Milligan faces stiffer competition for off-grade canola from elevator companies and crushers who are more eager than usual to blend poor quality canola this year because of the short crop.
“What people are willing to take and use has been stretched out a little bit,” said Holash.
Only 19 of the 2,000 harvest samples the Canadian Grain Commission has seen this fall were sample grade, but that number will rise as the season progresses.
“There will be some more when bins start to heat. There always is,” said Daryl Beswitherick, the grain commission’s program manager for quality assurance.
However, he said heating might be less of an issue than normal because the crop came off dry.
The grain commission says chlorophyll content doesn’t appear to be a significant problem based on the 1,177 samples of No. 1 canola it has analyzed. They had a mean chlorophyll content of 15 parts per million, which is only slightly above the 10-year average of 14.2 ppm.
However, Holash thinks high green seed counts could be an issue.
“We’ve had a very uncharacteristically high number of calls into the plant with regards to green seed,.”
There does appear to be a problem in Alberta. James Wright, spokesperson for the Agriculture Financial Services Corp., said crop quality is disappointing in that province.
He estimates only 81 percent of Alberta’s canola will make the top grade because of high green seed counts.
“The 81 percent is concerning. When I first came into this business back in the ’70s and ’80s, canola would go 90 to 92 percent in that No. 1 grade,” said Wright.
“We’ve been seeing it kind of slipping into the mid-to-high 80s making that top grade.”
He said 81 percent is a poor number, considering there was no real frost problem this year.
“Green seed seems to be an issue every year, even if it’s a good year,” said Wright.
Holash said there isn’t as much of a market for heated canola.
“There is some art and some science to extracting oil out of a damaged seed, and we’ve been doing that for a number of years, so we’re quite good at it,” he said.
Milligan pays growers “a pretty substantial percentage” of the price they would get for commodity canola. Holash couldn’t provide a typical amount because the company buys everything from five to 95 percent damaged canola, but he said in most cases the price will be higher than $10 per bushel.
Derek Squair, president of Agri-Trend Marketing Inc., works with producers trying to find a market for their damaged canola.
In the past, growers would be happy if they could get $6 or $7 per bu.
“The fact that Milligan is there is really upping the price of that product,” said Squair.
He said the market for off-grade canola is limited, so the recent expansion at Milligan is good news for growers.
Milligan increased its capacity to 20 million litres of annual biodiesel production from three or four million litres so it could help supply federal and provincial mandates.
Growers can deliver directly to the Foam Lake plant, arrange for Milligan or a commercial hauler to pick it up or drop the damaged canola off at collection sites.
The company has arrangements with Great Northern Grain Terminals Ltd. in Killam, Alta., and Ritchie Commodities in Langham, Sask., and is working on additional sites.
Canola Watch has compiled a list of other companies that may take high-green or heated canola.
It can be found at www.canolawatch.org/2011/05/02/companies-that-buy-high-green-canola/