The markets react to stories and rumours all the time,” a Chicago-based grain trader said recently.
Often, the biggest market moves are because of the rumours themselves, and values correct the other way once the facts are known. A couple of rumours circulated in the canola market in late October.
Chinese tariffs: Unconfirmed chatter in the trade just ahead of Halloween, that Chinese tariffs on Canadian canola were about to be announced, sent a chill through the canola market. It caused a quick downturn in the futures that had been testing two-and-a-half month highs.
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China launched an anti-dumping investigation into Canadian canola in early September in what was thought to be retaliation for Canadian tariffs on Chinese electric vehicles. The investigation is slated to last a year, but the latest talk is that concrete measures may be coming sooner rather than later.
China has been a major buyer of Canadian canola so far this marketing year. Total Canadian canola exports through 12 weeks, of 2.9 million tonnes, are up from only 1.3 million tonnes at the same point in the previous year. The bulk of that is headed to China, where buyers are thought to be stocking up ahead of possible tariffs.
U.S. buying Canadian canola oil: While there are concerns that China may shut the door on Canadian canola, Canada’s own domestic crush is still slated to grow to as high as 17 million tonnes over the next few years. Much of the oil produced will be destined for the United States.
Canola oil exports to the U.S. have doubled in the past three years, with about 3.2 million tonnes of crude and refined canola oil combined in 2023/24. That accounted for 96 per cent of all canola oil exports and much of it went to biofuel refineries, due in part to Canadian transportation advantages.
However, there is uncertainty over U.S. biofuel policy and the industry awaits guidance on tax incentives that may cut into demand for foreign-sourced feedstocks. Policies being discussed are primarily focused on limiting imports of things like used Chinese cooking oil, but canola oil could be caught in the net.
