Grain Snippet: Canola Prices Firm Going into Seeding
Canola seeding has commenced in South Australia into mainly dry soils, with Victorian growers also seeding with greater confidence after receiving reasonable April rainfall of 10 to 25mm and subsoil moisture from rains in December. For the 25/26 season, there is forecast 240,000ha to be planted to canola in South Australia, producing 515kMT based on a 5-year average yield of 2.15MT/ha. This would be a year-on-year increase of 166kMT (47.5%) due to the very late and poor growing conditions last year. Australia is forecast to produce 5.9MMT in 25/26, which is relatively unchanged y/y. Australia crushes around 1MMT of canola annually and is the second largest canola seed exporter (second to Canada), accounting for between 20 to 40% of global trade.
Forward prices for canola in South Australia have ranged from $800 to $830/MT for conventional (non-GM) canola through most of April. Supporting SA canola prices has been strong European rapeseed prices where stocks have been tight following poor production last season. The May’25 rapeseed contract (last season) rapeseed futures has been trading at a premium of as much as €70/MT over the August’25 contract, though this has pulled back rapidly as the May contract enters delivery and will expire soon. Rapeseed production in Europe is expected to rebound from 17.2MMT last season to 19.5MMT based on a return to average yields after very wet growing conditions last year reduced yield. Europe crushes most of their annual rapeseed production primarily for biofuel and is a net importer of rapeseed from Ukraine and canola from Australia. The European rapeseed harvest is due to commence in late June and stocks are forecast to remain tight, but slightly more relaxed, with supply and demand more evenly balanced.
Canola planting in Canada is due to start in May and the government agency, Stats Canada, is forecasting the area planted to canola in 25/26 to be down slightly (1.7%) to 8.76Mha and production forecast at 18MMT which is up 1% y/y. There are some strong caveats around Stats Canada’s forecast as growers may pull back on the area planted to canola due to a couple of headwinds. China is still undergoing an anti-dumping review of Canadian canola seed imports, which could result in a tariff being applied to imports. In March, China placed a 100% tariff on Canadian canola oil and meal which initially saw an increase in imports with a record 344kMT of canola oil imported in March ahead of the tariffs. Chinese imports of canola seed have also been strong over the past year at 6MMT up 1MMT y/y.
Both the Canadian canola and EU rapeseed futures have been trading near their strongest levels for the past 12 months, reflecting relatively tight supplies in Europe and strong exports from Canada. However, other veg oils such as soybean and palm oil prices have trended lower to sideways, as crude oil prices have fallen over the past 12 months due to increased supply from OPEC+ and concerns over global economic growth due to the US/China trade war.
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