Trade wars continue to pressure canola markets

After the introduction of a temporary tariff on Canadian canola, up to 400,000 tons of rapeseed meal that arrived from Canada accumulated in China's bonded warehouses before the introduction of the new tariffs, and now traders are considering sending this meal to other countries in Southeast Asia, possibly even with a large discount of up to 30%.

 

This information again increased pressure on Canadian canola prices, which were already slowly recovering after the fall caused by the imposition of tariffs by China.

 

November canola futures in Winnipeg fell 1.2% yesterday to CAD 652/t or $472/t, losing 4.3% for the week and 6.6% for the month.

 

Amidst a possible reorientation of China's canola purchases from Canada to Australia, European traders have stepped up purchases of local and Ukrainian rapeseed, as Australia was the main supplier of rapeseed to the EU last season.

 

November rapeseed futures in Paris continue to rise in price and have already reached €475/t or $554.5/t, although they are trading 2% cheaper than a month ago.

 

Demand for rapeseed in Ukraine from exporters is growing, and prices have returned to the level of 23,700-24,500 UAH/t with delivery to Black Sea ports, and export prices under currency contracts are up to $535-543/t, which forces processors to raise their prices to 23,300-24,200 UAH/t with delivery to the factory, and for oil content above 47-48%, a premium of 300 UAH/t is even offered.

 

It is worth noting that producers are very cautious in selling rapeseed at low prices, awaiting the President's final decision on the introduction of 10% export duties on soybeans and rapeseed and further growth in demand against the backdrop of a lower-than-planned harvest.

 

With the current crop running out, Australia exported just 102,000 tonnes of canola in June, down significantly from the 659,200 tonnes shipped in May. Monthly exports are likely to be limited to 150,000 tonnes until November, when the new crop becomes available. In total, Australia shipped 4.95 million tonnes of canola in the first nine months of the 2024/25 marketing year, of which 3.5 million tonnes went to the EU.

 

China has not been a major importer of Australian canola since 2020 due to concerns about blackleg disease, but this season Australian farmers are actively interested in forward sales of canola to China, following the imposition of a 75.8% tariff on Canadian canola.

 

The Australian Oilseed Federation this month released its preliminary forecast for the 2025/26 canola crop, estimating it at 5.97 million tonnes, down 0.27 million tonnes from 2024/25.