Black Friday for canola and canola prices came early

Global stock markets continue to experience a catastrophic fall in canola and canola prices, driven by lower soybean oil prices and the new US administration's plans to impose tariffs on canola and oil from Canada.

 

Significant speculative overbought in futures was met with a sharp sell-off of contracts caused by the possible introduction of a duty.

 

January canola futures on the Winnipeg exchange yesterday fell another 2.6% to CAD565/t or $403/t (-14.3% since November 15), adding pressure to EU quotes.

 

February rapeseed futures on the Paris MATIF yesterday fell 2.8% to €493/t or $520/t (-10% in 10 days), which will have a negative impact on European farmers who have held back sales in anticipation of higher prices.

 

In Ukraine, most farmers sold out rapeseed at high prices, so now its stocks are minimal.

 

Declining soybean oil prices are also putting pressure on canola quotes. December soybean oil futures on the Chicago Stock Exchange fell 4.4% to $900/t yesterday (-11.2% since November 15) due to uncertainty over the fate of the US biofuels tax credit program.

 

Traders fear that the Trump administration will not preserve the US biofuel blending credit, which is due to be renewed by early January 2025.

 

The U.S. biofuels industry is the largest buyer of Canadian canola oil, so lobbyists are trying to get Canadian canola exempt from Trump's tariffs and preserve tax credits for biofuels, since almost all biofuel plants are located in the pro-Trump Midwest, and farmers will be hit the hardest by the reduction in processing. who supported Trump.

 

It is possible that canola and canola prices can be supported by the Statistics Canada report, which will be released on December 5, if the estimate of the canola harvest in it is lowered from September's 18.98 million tons to the market estimate of 17-18.5 million tons.