US and China trade wars against Canada have caused canola and rapeseed prices to plummet

After the US imposed a 25% tariff on Canadian goods, China also announced the introduction of a 100% tariff on canola oil, meal and peas, as well as a 25% tariff on pork and seafood from Canada, starting March 20, 2025, calling it a response to Canada's introduction in August 2024 of a 100% import tariff on Chinese electric vehicles and a 25% tariff on steel and aluminum.

Canada exports canola oil mainly to the US and canola meal to China, and last year it supplied about $1 billion worth of canola oil, meal, and peas to China.

Against this backdrop, March canola futures fell 6.8% yesterday to 591 CAD/t or 410 $/t (-12.5% for the month), and May futures fell 7% to 603 CAD/t or 418 $/t.

Following canola prices, May rapeseed futures on the Paris exchange fell 2.9% to €481.75/t or $523/t (-10.5% since the beginning of March), as the EU remained the main market for Canadian canola.

Amid US trade wars against Canada, Mexico and China and promises to impose tariffs on all imported goods, the US stock market has fallen by $5 trillion, which could lead to a crisis in the US economy.

The oil market responded by falling, with May Brent crude futures down 10.5% to $69.2/barrel in the month. If US production activity does not recover, oil prices will continue to fall.

In Ukraine, the purchase of rapeseed in the Black Sea ports is almost complete, with only one trader purchasing the volumes needed for the ship's shipment at a price of 25,000 UAH/t or $520/t. But the drop in prices in the EU will soon affect forward prices for the new crop of rapeseed.

After China imposed a 100% tariff on Canadian meal and oil, the most active rapeseed meal futures on the Zhengzhou Exchange rose by 6% to 2,611 yuan/t or $360/t (which was the largest daily increase since September 2022), and rapeseed oil futures rose by 5.2% to 9,213 yuan/t or $1,270/t.

However, China can buy rapeseed oil from the EU and the Russian Federation, so after the markets stabilize, we can expect some price reduction.