Canada's canola crushing facilities will reduce competition against Australia

North America is the main driver behind these market changes, with Canada expected to have four million tonnes of canola crushing capacity online by early 2024.

After the Paris Agreement, an international climate change treaty signed in 2015, America and Canada have committed to reducing climate emissions to reach their 2050 target.

North America has become a big believer in biodiesel (diesel mixed with vegetable oil) to reduce emissions - which has resulted in an exponential increase in demand for vegetable oil.

In response, Canada has been a large investor in creating crushing facilities for canola - which it is the world's biggest producer of.

In April, Canadian crop trader Louis Dreyfus Company announced it would more than double its facility's annual crush capacity to more than two million metric tonnes.

The announcement followed similar plans by investors to expand into canola crushing, including Richardson International, Cargill and Viterra.

In 2021, Richardson International committed to doubling its annual crush capacity to 2.2 million metric tonnes, along with a high-speed shipping system with three 9500-foot loop tracks, complementing infrastructure currently in place.

Also in 2021, Viterra announced plans for the world's largest integrated canola crush facility, at an impressive 2.5mmt.

In a slightly different approach, Cargill has committed to crushing plants in both Saskatchewan, Canada and Australia.

Last month, Cargill announced $73 million to upgrade and expand its Newcastle, Narrabri and Footscray oilseed crush facilities.

Cargill Australia agriculture supply chain managing director Zsolt Kocza said the investment would connect Australian farmers to international markets, creating more demand for locally grown canola.

"This investment in increasing our crush capacity will help Cargill better serve the growing demand for canola and cottonseed products from customers both in Australia and across Asia," Mr Kocza said.

With canola production on the rise, Cargill said it was investing to expand its crush capacity and increase production of canola oil and meal, as well as cottonseed oil and meal.

Rabobank agricultural analyst Dennis Voznesenski believed this was good news for Australia, as there would be less competition from 2024, which would support prices.

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"It means that the world's largest canola exporter will be able to export substantially less of its canola, because it has to be used in the domestic North American market," Mr Voznesenski said.

While prices aren't trading as high as their above $1000 peak, Mr Voznesenski said the current trading price of about $660 was still a very good price for canola.

"Historically, $660 is still a very good price," he said.

"But it's nowhere near the highs we saw last year, so it has come down a fair bit already."

With facilities coming online in Canada, and growing demand in Europe, Mr Voznesenski expects there to be support for Australian canola.

CBH chief marketing and trading officer Jason Craig agreed there was still a lot of opportunity for Australian canola, especially with Canada focusing on canola crushing.

"Clearly, Canada is building more crushing facilities, and therefore their exportable surplus will continue to decline as a percentage of their crop as the US biofuel market continues," Mr Craig said.

He also believed there would be new opportunities not just in the traditional European market, but also with non-traditional trading partners.

These include the Middle East, Pakistan, Japan and Mexico.