Canola is gaining momentum as demand for biofuel feedstocks increases across the United States, creating new opportunities for growers and processors.
CHS officials say canola has long been valued for food-grade oil production, but future growth is expected to come largely from the renewable fuels sector. The crop's high oil content and expanding processing infrastructure position it as a potential contributor to meeting rising biofuel demand.
Historically, most U.S.-produced canola oil has been used in food applications. Tony Roelofs, director of oilseed processing for CHS, said all canola oil processed at the company's Hallock, Minnesota, facility is food grade and supplied to customers for products such as salad dressings, sauces and frying oils. However, he said demand growth is increasingly expected to come from biofuels production.
The shift comes as federal renewable fuel requirements continue to expand. In March, the U.S. Environmental Protection Agency issued final Renewable Fuel Standard volume obligations for 2026 and 2027, requiring the use of 25.82 billion gallons of renewable fuels in 2026 and 25.98 billion gallons in 2027. The requirements include a 60% increase in biomass-based diesel blending volumes.
According to Andy Smith, a CHS commodity trader for canola, the higher blending requirements are expected to increase demand for vegetable oils, including soybean and canola oil.
The U.S. Department of Agriculture projects U.S. canola crush will reach a record 5.2 billion pounds during the 2025-26 marketing year, up from 4.9 billion pounds in 2024-25. Canola acreage has also trended upward during the past five years, averaging annual growth of about 8%.
U.S. canola plantings reached a record 2.75 million acres in 2024 before declining to 2.34 million acres in 2025. USDA projected planting estimates indicate acreage could rebound to 2.69 million acres this year.
Industry officials point to canola's oil yield as a key advantage. Canola seed contains about 40% oil, compared with roughly 20% for soybeans. As a result, a bushel of canola can produce about twice as much oil as a bushel of soybeans, making it an efficient feedstock for renewable diesel and other biofuel applications.
CHS anticipated growing demand for canola oil when it acquired a processing facility near Hallock in 2015. The plant, one of the largest canola processing facilities in the United States, crushes approximately 500,000 metric tons of canola annually and operates year-round.
While Canada remains the dominant canola producer, with acreage roughly 10 times greater than that of the United States, CHS sources as much U.S.-grown canola as possible and expects domestic production to increase over time.
North Dakota and Minnesota currently lead U.S. canola production, though CHS officials see additional growth potential in Montana, Idaho and Washington.
Beyond market opportunities, canola offers agronomic benefits. Smith said the crop can help disrupt pest and disease cycles within crop rotations. Production costs are generally lower than corn and comparable to wheat.
Marketing options for canola have also expanded. CHS offers forward contracts, basis contracts and hedge-to-arrive contracts, along with spot delivery opportunities at harvest. According to the company, canola marketing now resembles that of major row crops such as corn and soybeans.
The crop also generates value through canola meal, a co-product produced during crushing. Canola meal is used by large dairy operations, particularly in Wisconsin, Texas, New Mexico and California. Although it contains less protein than soybean meal, its higher fiber content makes it suitable for ruminant feed rations.
CHS officials said access to both food and fuel markets provides flexibility in marketing canola oil as demand evolves.
Source: CHS, "A golden opportunity for canola"