Grain Snippet: Global Canola Prices Remain Firm on Tight Stocks
Globally canola and rapeseed stocks are tight, and futures markets are in backwardation where spot prices are higher for old crop than for the deferred new crop contracts. 25/26 global production in exporting countries are expected to increase 3MMT to 48.5MMT and stocks are forecast to increase for 25/26, however there are some concerns over northern Europe, Ukraine and parts of south-eastern Australia and Western Australia, that could see production lowered. Rapeseed and non-GM canola is a major feedstock for EU mandated sustainable biofuel production, and it is difficult to substitute for other vegetable oils as an alternative feedstock. Amid the tight global canola stocks outlook, SA and Vic 25/26 canola prices remain elevated.
New crop canola prices have been range bound between $790/MT and $830/MT (Port basis) since mid-March. The USDA has forecast Australian 25/26 canola production at 6.15MMT up 0.2MMT y/y. Rabobank, in their May 2025 Australian 25/26 Winter Crop Outlook, have forecast the area planted to canola in Australia at 3.2Mha unchanged y/y.
For South Australia there has yet to be forecasts from PIRSA or ABARES, however, Rabobank have forecast a sharp decline in the canola area in SA, forecasting the area sown at 130,000ha which is a decrease of 111,000ha (44.7%) y/y. The decline in area sown is due to very poor production last year, disincentivising growers to advance canola area in 25/26, particularly amid another dry start to the season. Overall, the start to the Australian canola crop has been on the poorer side due to lower rainfall and a later start through SA, Victoria and Southern NSW. Good spring conditions are needed to produce an average crop where subsoil moisture is limited in key growing areas this season.
European Union 25/26 rapeseed production is forecast 19.2MMT up 2.4MMT (14%) y/y due to a 6% increase in the area planted at 5.95Mha and improved yield. Yield is expected to improve 9% to 3.2T/ha due to more favourable growing conditions compared to the overly wet 23/24 season. However, there is concern that recent and forecast dry weather conditions though France and Germany could reduce impact yields and lower production. Despite the higher y/y forecast production, European Union canola imports are expected to rise in 25/26 as domestic biofuel demand exceeds local production.
The USDA has forecast the EU to import between 6 – 7MMT of canola seed which is approximately 40% of global trade. If EU production is lower due to poorer yields, then more reliance is placed on Ukraine and Australia for non-GM canola which is preferred over GM in the EU. With tight carry in stock and a demand for non-GM canola, EU rapeseed (and therefore Australian non-GM canola) is forecast to continue trade at a strong premium to GM canola.
This is a sample only, if you would like to view the entire document and our recommendations, please contact CloudBreak to discuss becoming a member on (08) 8388 8084.