Grain Snippet: Changes to Global Oilseed Flows
Canola crops in South Australia are beginning to flower and are in generally good health due to favourable growing conditions despite the late start to the season. ABARES’ recent September Crop Report has the 25/26 SA canola crop pegged 373kMT, unchanged on last year but 138kMT behind the 5-year average. The decline in production is due to a pullback in the area planted due to very low rainfall in the first half the year and a lack of subsoil moisture. ABARES updated their forecast for the Australian canola crop to 6.4MMT, up 0.7MMT on the previous forecast in June. Ideal conditions in WA saw an increase of 0.5MMT to 3.3MMT due to higher yield estimates.
Global canola prices have been broadly softening since July and through the northern hemisphere harvest period. EU rapeseed production is estimated at 19.65MMT, up 2.8MMT y/y on a return-to-normal growing conditions following excessive rainfall and waterlogging in the 24/25 season. European rapeseed futures prices have fallen around €55/MT since mid-June, when prices peaked on a combination of tight rapeseed stocks (due to the poor production in 24/25) and a spike in crude oil prices following the brief attack by the US against Iranian nuclear facilities. South Australian non-GM canola prices have fallen from a peak in mid-June of $884/MT to circa $780/MT (at the time of writing) in line with EU rapeseed futures waning.
The Canadian canola harvest is well underway and is forecast at 19.25MMT, virtually unchanged y/y. Canadian canola futures fell sharply in August, when China announced a preliminary duty of 75.8% on Canadian canola seed imports, effectively ending trade. In September 2024 China announced an anti-dumping inquiry into Canadian canola seed imports, following Canada placing tariffs on imports of electric vehicles, steel and aluminium from China. The duty by China on Canadian canola seed follows a 100% tariff placed on Canadian canola meal and oil in March 2025.
The duty announced by China on Canadian canola has created some uncertainty in Australian canola markets and prices have subsequently remained volatile. The duty has opened the door for Australian canola, with reports China has purchased shipments of 25/26 canola from WA, the first since 2020. However, the volume of Australian-origin canola China may purchase could be limited as Chinese importers front-ended their program by ramping up Canadian canola seed imports ahead of the duty coming into effect.
Also impacting global oilseed prices and trade flows is the ongoing trade war between the US and China. China is expected to avoid buying US soybean and preference South American origin in lieu. On the premise that US soybean exports would be hampered by geopolitics, US farmers pivoted by reducing the area planted to soybeans in 2025, increasing the area planted to corn. US soybeans could instead pick up market share from South American destinations as well as turn internally into the US biofuel industry.
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