Canola prices await the results of the Canadian Prime Minister's visit to China
Canadian Prime Minister Mark Carney will make a four-day visit to China this week, becoming the first Canadian leader to visit China since 2017. He is scheduled to meet with Chinese President Xi Jinping and Chinese Premier Li Keqi and will seek to improve economic relations between the countries, while the Chinese side insists on resolving political issues first.
Recall that relations between China and Canada deteriorated after Canadian authorities arrested a key official of the Chinese telecommunications company Huawei in December 2018, and then in 2024, following the line set by the US, imposed a 100% tariff on Chinese electric vehicles, which forced China to impose tariffs on some Canadian agricultural goods, in particular an 86% tariff on canola.
Carney is currently seeking to diversify the Canadian economy and reduce its dependence on the US, which accounts for nearly 80% of Canadian exports, especially amid deteriorating relations with the US since Trump returned to the White House.
March canola futures have risen 4.2% year-to-date to CAD 628/t or $452/t (which is in line with last year's level) in anticipation of resumption of supplies to China and amid a speculative rise in oil prices.
March Brent crude futures have risen 9.4% year-to-date to $66.5/barrel amid potential supply cuts due to events in Venezuela and Iran.
February rapeseed futures in Paris also recovered after falling to a one-year low on Christmas Eve and rose 4% to €470.25/t or $547.25/t, but the spread between Canadian canola and rapeseed prices in Paris narrowed to $95/t due to higher canola prices.
If China reduces tariffs on Canadian canola, this will support canola prices and, accordingly, rapeseed prices, but in the long term, the decline in oil prices will eliminate this support factor, so quotes will remain within the same range, and in the spring they will feel the pressure of a seasonal increase in supply from large stocks of canola in Canada and rapeseed in the EU.
