Increasing canola supplies from Canada to China will exacerbate the decline in canola oil prices

According to China News, in November, large shipments of Canadian canola began to enter China's processing plants, which sharply increased the supply of canola oil and lowered the demand price.

As a result of increased imports of rapeseed to China in October, its stocks as of November 17 increased to 421,000 tons, which is 368% higher than on November 3.

The import of rapeseed oil to the country in October increased compared to September by 64.08% to 233 thousand tons, which is the second largest indicator of monthly imports this year, then the largest deliveries were recorded in April. As a result, rapeseed oil stocks increased by 5.64% to 395.1 thousand tons in the last week.

As of November 24, the average price of third-grade imported rapeseed oil was RMB 8,794/t or $1,230/t, down 2.25% from October. There is an oversupply of rapeseed oil on the domestic market, which continues to lower prices for imported rapeseed oil against the background of negative trends in the world market.

In the coming months, the import of rapeseed oil will remain quite active. According to forecasts, during November-December, it will amount to 1 million tons, which will be 2.2% lower than the same indicator in 2022. However, against the background of a decrease in demand and forecasts of an increase in soybean production in Brazil, prices for imported rapeseed oil will continue to fall in December.

In Canada, canola traded steady at CAD702/t or $517/t (-1.1% week, +2.2% month), higher than Australian canola, which was offered at $500/t FOB, and for European and Ukrainian rapeseed, which I offer at $475/t FOB and $400/t FOB, respectively.

Declining canola oil demand from China amid increased supply of new-crop canola from Australia will continue to weigh on canola and canola oil prices in the near term, especially if favorable soybean weather in Argentina and Brazil continues.