Ottawa: Canada is considering changes to its Clean Fuel Regulations as domestic ethanol producers face growing competition from cheaper US supplies, a move that could affect demand for corn and canola across the country, UkrAgroConsult reported.
Canadian ethanol producers and farm groups are seeking changes that would strengthen the position of domestic biofuel producers and encourage refiners to buy more ethanol from Canadian suppliers.
US ethanol is currently estimated to be 7% to 35% cheaper for Canadian refiners seeking to meet Clean Fuel Regulation requirements than ethanol produced domestically. The price difference has put Canadian ethanol producers at a disadvantage in their own market.
The review could have a direct impact on corn demand, particularly in Ontario. Around one-third of the province’s corn crop is used to produce ethanol, making the biofuel industry an important market for the grain.
Canola is also closely connected to the biofuel sector. Around 14 million tonnes of canola produced in Western Canada is sent for crushing, with biofuel production providing a significant market for the resulting canola oil.
The outcome of the policy review could therefore affect more than Canada’s fuel market. Changes that provide greater support for domestic biofuels could lead to higher processing of corn and canola, while weaker incentives or requirements could put additional pressure on demand for both crops.
