Developments over the past week made it very clear what western Canada has suggested all along -- that Canadian tariffs on Chinese EV imports are responsible for trade restrictions imposed by China and that removing them would restore canola (and other) exports.

In case it was missed, China's ambassador to Canada was authorized to offer removing tariffs on canola if Canada did the same on Chinese EV imports. The premiers of both Manitoba and Saskatchewan quickly urged Prime Minister Carney to take China up on it, but optimism faded when Ontario Premier Doug Ford threw a wet blanket on hopes for a quick resolution when he publicly responded with "no d**n way." It seems the team Canada approach only works if it is in the best interest of eastern Canada with the battle in Ottawa over the issue clearly far from over. That took the wind out of canola's sales with prices drifting since.

That takes us to the main point of this post. That the real success story that gets overlooked amid all the emotions over trade is the domestic crushing industry. It is on track to contribute to another record in total domestic use as seen in the accompanying chart.

Agriculture and Agri-Food Canada (AAFC) is currently projecting total domestic use of canola will hit 12.226 million metric tons (mmt) in 2025-26 compared to the previous record of 11.698 mmt set in 2023-24. Just how impressive that is really comes into focus when you compare it to 2001-02 when only 2.558 mmt of the canola crop was used domestically.

Even on a percentage of the crop produced, total domestic use hit a new record high with 61% of the estimated production expected to be consumed at home. That compares to a 25-year low of 35% set in 2009. And that takes us to the real issue: Concerns over competition for limited supplies have delayed an even greater expansion of the crushing capacity.

If memory serves correctly, there was a push at one time for 25 by 25. That was, 25 mmt of canola production by the year 2025. With rotational concerns, disease pressure and increasingly violent weather extremes, that goal has long since been dropped for being unrealistic, but it does highlight the dilemma.

With production hovering around 20 mmt for nearly a decade now, and total domestic use likely to exceed 12 mmt this year, there is no room for exports to be in the 10 to 11 mmt range that was common for many years. Even the 2024-25 level of 9.331 mmt is obviously unsustainable.

Which takes us back to trying to put the trade disruption with China into perspective and not let it drive our marketing decisions. As it is, exports are expected to have to fall to 7 mmt due to supply constraints (from 9.331 mmt last year) according to AAFC. As a side note, USDA pegged canola exports at 6.7 mmt in its last update in September.

According to the Canadian Grain Commission (CGC) grain statistics weekly report for week 9 (to Oct. 5), exports had only reached 796,100 metric tons (mt) compared to 1.951 mmt by the same time last year. What is not clear is whether a lack of demand is responsible or a lack of supply. With there being relatively little carryover remaining on farm at the end of the last crop year to deliver into the new year, a relatively poor price failing to encourage delivery, and a delayed harvest -- producer deliveries were significantly lagging. By the end of August (or week 4), only 624,500 mt had been delivered compared to 1.308 mmt the year before. And it would still have to be shipped. It's hard to export when there is little arriving at the port, especially when domestic crushers were receiving the limited supplies.

As late as week 9, terminal receipts of canola still had only reached 800,400 mt compared to 2.087 mmt at the same time last year. Meanwhile, domestic disappearance had hit a record setting 2.077 mmt compared to 1.933 mmt last year. And even with the reduced exports, total commercial stocks only amounted to 1.274 mmt compared to 1.632 mmt at the end of week 9 last year. Not hard to tell which market was being looked after amid limited supplies.

So, that takes us back to the beginning. Record domestic use should be celebrated and prioritized. After all, it is our most reliable future demand (especially if the political will and economics can get behind an expansion of the renewable diesel industry). And although the China trade dispute needs to be resolved with a bit of common sense prevailing, exports do need to be curtailed from last year's level, so there is time to arrive at a China breakthrough without doing permanent damage. In the meantime, try not to let headline news have an overweight impact on your marketing strategy.

I welcome feedback along with any suggestions for future blogs. My daily comments can be found in Plains, Prairies Opening Comments and Plains, Prairies Quick Takes on DTN products.

Mitch Miller can be reached at mitchmiller.dtn@gmail.com

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