Grain Snippet: Moving Markets for Canola
The SA and Vic canola growing season has improved significantly from the first half of 2025 with the late start and low subsoil moisture, to now better soil moisture profiles following good rainfall through winter in most regions. The USDA WASDE production forecast for the 25/26 Australian canola crop was increased to 6.4MMT up 0.7MMT m/m and up 0.3MMT y/y due mainly to higher anticipated yields in WA.
Global canola and rapeseed production has recovered in 25/26 after yields (particularly in Europe) were down in 24/25. In the September USDA WASDE report, 25/26 global canola production among major exporters was forecast 49.35MMT up 0.8MMT m/m and 3.35MMT y/y. 25/26 global canola stocks-to-use are forecast to increase to 10.2% up from 7.25% m/m and 2.6% y/y which is likely to weigh on canola prices.
China announced a 75.8% duty on Canadian canola seed imports on 12/08/25, effectively halting trade between the two countries. In 2019 China restricted Canadian canola imports and pivoted to Australian canola. Canada, in turn then increased exports to the EU with the volume increasing from 360kMT in 2018 to 2.5kMT in 2020. EU imports of Canadian canola for the first six months of 2025 (Jan-Jun) are estimated at 846.6kMT, which occurred prior to the China tariff announcement suggesting Canada was pivoting canola sales to the EU prior to the tariff announcement.
From 2019 to 2021, China severely limited Canadian canola seed imports due to a Chinese company executive being held in Canada for extradition to the US. During this period Canada increased canola seed exports to Europe from 360kMT in 2018 to 2.5MMT in 2020, which is likely achievable under the current canola restrictions in China.
China is likely to pivot to Australia to buy canola and in particular GM canola, however it is likely to focus on WA where 25/26 production is forecast at 3.3MMT before SA and Victoria where production is forecast at 400kMT and 1.0MMT respectively. Canada is likely to target other existing Australian canola markets, such as Bangladesh and the UAE, during the time it will take to adjust trade flows amongst the various countries.
Canola markets are seeing further pressure from soybeans. Argentina has removed export taxes on soybeans making their beans and soy products more competitive on global markets. Also, the Argentinian peso has depreciated against the US dollar adding to price competitiveness.
The impact of these international markets means Aussie growers are seeing ongoing volatility in canola prices and a large disparity between GM and non-GM in the market. The current price spread between non-GM and GM canola is circa $110/MT which is similar to the spread last harvest. The spread could close up as harvest approaches harvest if China increases Australian GM canola imports. Thus far only trial vessels have been committed, but the market remains hopeful.
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