Beijing in September launched a one-year investigation into canola imports from Canada after Ottawa imposed tariffs on Chinese-made electric vehicles, prompting importers fearing retaliatory anti-dumping duties to scale back purchases from Canada.

December shipments from Canada dropped 12 per cent from the same period the year before to 588,181 metric tons.

That was the first year-on-year decline in seven months and the smallest shipment volume since August.

More than half of Canada’s canola exports make their way to China, the world’s biggest oilseed importer.

China’s total canola imports rose in 2024 to 6.39 million tons compared to 5.49 million tons in 2023, customs data shows. Nearly all of that, at 6.13 million tons, arrived from Canada, amounting to $3.29 billion (C$4.71 billion).

Total Canadian canola exports have been strong since Aug. 1, with China accounting for over 75 per cent of shipments, Farm Credit Canada economists said.

“The export pace is running 10 weeks ahead of schedule,” they wrote in a  Jan. 15 report.

“Even if China slows down as expected, Canada will only need to export another 3 million tonnes of canola to reach Agriculture and Agri-Food Canada’s (AAFC’s) export target of 7.5 million tonnes in 2024/25. China’s anti-dumping probe is more likely to impact 2025/26 exports.”

—With files from Glacier FarmMedia

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Increases in canola exports, especially to China, accounted for much of the growth so far this year. The CGC reported total canola exports were about 3.03 million tonnes, improving on the 1.58 million a year ago. China has taken in about 2.29 million tonnes at this point in 2024/25, versus the 1.01 million by last October.

With threats of Chinese tariffs on Canadian canola, the trade suspects the country’s buyers have been frontloading. In early September, Chinese authorities announced an investigation into alleged canola dumping by Canada. The move was seen as retaliatory for the Canadian government slapping a 100 per cent tariff on imports of Chinese-made electric vehicles, as well as sharp hikes on levies for steel and aluminum imports.

Canada’s number two canola customer, Japan, upped its imports of the oilseed as well. So far in 2024/25, Japan as taken in 310,400 tonnes compared to 277,300 the same time last year.

Other sharp hikes include the European Union, with its members acquiring 126,700 tonnes so far this marketing year compared to 42,500 a year ago, and those to the United Arab Emirates have shot up to 122,000 tonnes versus 37,400.

The EU has also boosted its durum imports from Canada, at 295,500 tonnes through October, with Italy accounting for more than 89 per cent of those purchases. By October last year, Italy had acquired all of the EU’s imports at 149,700 tonnes. Total durum exports of 916,800 tonnes through were 35 per cent on the year.

Exports of non-durum wheat as of October, at 4.78 million tonnes, were down from 5.26 million in 2023/24.

China deeply cut its wheat imports from Canada, at 211,900 tonnes this year versus 536,400 a year ago.

Canadian corn exports witnessed a strong upswing, reaching 293,800 tonnes versus 86,800 a year ago. The EU accounted for the increase, particularly Ireland. Of the 268,400 tonnes imported by the EU, 237,900 have gone through Ireland. At this point last year the EU took in 71,400 tonnes.

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The canola trade between the two countries is worth about $2 billion (C$2.81 billion) a year, but lower imports by China, the world’s biggest canola importer, could further squeeze ICE canola futures RSF5, which have dropped more than 10 per cent in the past month.

China has sufficient canola supply for the coming months, but Canadian oilseed farmers face a double whammy as its reduced buys coincide with import tariff threats by U.S. President-elect Donald Trump, including canola, traders and analysts said.

“China has yet to impose any duties but it already has a desired impact as buying of Canadian canola has come to a standstill,” said a trader with an international company that sells oilseeds to China.

“As of now, supply of canola in China is sufficient, with large imports in the past months.”

Oilseed buyers in China have been shipping Canadian canola at a record pace since September to take delivery of cargoes contracted before Beijing unveiled an anti-dumping investigation into Canadian imports of the oilseed, in retaliation to Ottawa’s tariffs on Chinese-made electric vehicles.

Buyers in China have booked to ship just about 250,000 metric tons of Canadian canola, also called rapeseed, for December shipment, two Singapore-based oilseed traders said, after taking around 500,000 tons in November and 863,000 tons in October.

“Buyers have been busy ensuring they ship the cargoes booked before Beijing’s announcement and before actual duties come into force,” the second trader said.

Canola is crushed to produce cooking oil and other products, including renewable fuels, and meal for animal feed.

China also has plentiful supplies of soybeans to bridge any shortfall in availability of canola, however, traders said.

“Some domestic rapeseed crushing plants have been forced to change to crush soybeans,” said Gan Quankun, director of agriculture products with trading company Zhangchiyoudao Asset Management in the commercial hub of Shanghai.

“Mainly because you (importers) are worried about policy risks, so you don’t dare to import rapeseed.”

While Chinese crushers are switching, retail demand for canola oil is likely to persist as many consumers prefer it to alternatives, despite its higher price.

China has enough stocks of canola to last until February, traders said, with buyers likely to switch to other origins, including Australia, in 2025.

China imported 5.074 million metric tons of canola between January and October this year, up from 4.27 million a year ago, customs data shows. That includes 4.84 million tons from Canada, 184,555 tons from Russia and 46,366 tons from Mongolia.

—Additional reporting by Ed White in Winnnipeg

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Among the grains and oilseeds, the lone alteration came with corn’s domestic use number for 2023/24. AAFC tacked on 300,000 tonnes, raising it to 15.953 million. Otherwise, for the section the department carried over the data from its March report.

Despite lackluster canola exports so far in 2023/24, AAFC maintained its projection for 7.70 million tonnes. With the Canadian Grain Commission reporting year-to-date canola exports of 4.37 million tonnes with 13 weeks to go, one analyst commented they might make six million tonnes at most. Should exports not reach its projection that would have a major impact on the carryout of two million tonnes.

Of the pulses, dry pea ending stocks for 2024/25 were cut from 240,000 tonnes in March to 190,000, while those from 2023/24 were reduced from 210,000 tonnes to 175,000.

The carryover for mustard was also revised, with 2024/25 projected to be 105,000 tonnes, bumped up by 5,000.

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July canola fell below its 20- and 100-day moving averages, settling right on its 50-day moving average around C$623 per tonne on April 17 after losing nearly C$30 per tonne in the span of five days.

“The momentum indicators have all turned decidedly lower,” said MarketsFarm analyst Mike Jubinville. Although he added that the futures may be getting into oversold territory by some metrics.

Jubinville said there was little supportive news in the markets to provide any upward momentum, noting that “if there’s bearish news or no news, we go down.”

While most of the Canadian Prairies are still dealing with some element of dryness, there has been welcome precipitation recently and Jubinville said there was no real production concerns ahead of spring seeding.

Meanwhile, the lack of export demand for old crop canola continues to overhang the market. Canada has exported 4.24 million tonnes of canola through 36 weeks of the 2023/24 marketing year, which compares with 6.25 million tonnes by the same time the previous year.

“It’s crickets on the export front,” said Jubinville. He expected it would be challenging to even hit six million tonnes during the marketing year at the current pace, let alone the seven million tonnes forecast by Agriculture and Agri-Food Canada.

—Phil Franz-Warkentin is an associate editor/analyst with MarketsFarm in Winnipeg. 

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“They’re here to stay,” said Jarrett Beatty, an exporter with Parrish & Heimbecker, during the Canola Council of Canada’s Canola Utilization Forum earlier this year.

“Unless they have an environmental issue, they’re going to continue to be a bit of a thorn in our side in terms of capturing market share.”

Australia is expected to export 4.4 million tonnes of the oilseed this year, down from 5.87 million tonnes last year and 5.91 million tonnes the year before that. Those figures are about double the annual volumes it historically shipped out.

Beatty said Australian canola is selling at a C$50-$60 per tonne discount in markets such as Mexico and Japan. The discount was as high as $100 per tonne last year when Australian growers harvested an eye-popping 8.27 million tonnes of the crop.

“The fact that Japan took any seed from Canada (that year) is a testament to their loyalty and their love of our product,” he said.

However, there is one market where Canada still rules due to a phytosanitary constraint.

“We have been more competitive in China because of their dockage regulations of one per cent and Australia’s inability to meet those regulations,” said Beatty.

Canadian exporters have long complained about having to clean to one per cent dockage to access the Chinese market.

“It has actually ironically given us a great advantage into China,” Beatty said.

Australia does not typically clean its canola, as its dockage off the combine is lower than Canada’s. It would have to invest in port cleaning facilities to access the Chinese market.

Beatty forecasts that China will buy 4.07 million tonnes of Canadian canola in 2023-24, which would be 61 per cent of total sales for the year. Exports to other markets, such as Japan, Mexico, United Arab Emirates, Pakistan, the United States and the European Union, are well below normal volumes.

“We are not competitive on prices (versus) Australia into those marketplaces,” he said.

Poor export performance is why the trade believes Canada’s ending stocks will be 3.74 million tonnes, almost double the two million tonnes Agriculture and Agri-Food Canada is forecasting.

“Growers were slow to engage as the prices were coming down and China was slow to ramp up,” Beatty said. “And again, we had this major pressure from Australia.”

The good news is domestic crushers are usurping more of the canola supply, consuming an estimated 10.93 million tonnes of the crop in 2023-24 compared to 6.67 million tonnes of exports.

Beatty said Richardson International’s new plant in Yorkton was recently commissioned and is now processing canola. Cargill’s plant is expected to open in 2025 and the Louis Dreyfus plant will follow in 2026.

Each of those facilities is capable of consuming 1.12 million tonnes of the oilseed annually, potentially spiking crush volumes in the next few years.

Jeff Pleskach, a trader with Cargill, said that will reduce Canada’s seed exports, while canola meal exports will rise.

China will be the target market for what is expected to be about three million tonnes of additional Canadian canola meal production. The country has a rapidly expanding aquaculture industry and canola meal has been underused in its dairy sector, the trader said.

There is also an anticipated drop in Chinese canola crushing as that capacity relocates to Canada.

Canola meal sales into the United States, however, will face stiff competition from expanded U.S. soymeal production, at least in hog and poultry rations.

Canola quality

Beatty was asked how Australia’s canola stacks up to Canadian canola on oil content.

It typically higher, he responded; in the range of 46-47 per cent compared to Canada’s 43-44 per cent, since it is grown as a winter crop in Australia. That makes Australian canola even more competitive, especially in the past few years when Canada’s oil content has been lower than normal.

Curtis Rempel, vice-president of crop production and innovation with the Canola Council of Canada, said the Western Canada Canola/Rapeseed Recommending Committee sent a signal to breeders a while ago to increase protein content.

That has come at the cost of oil content. If the industry wants the focus to shift back to oil, it needs to inform breeders.

“They can’t do it on a dime, but certainly over a five-year period, they can start edging levels up,” he said.

Rempel also noted that genomics research shows it is possible to increase both oil and protein at the expense of fibre.

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“Until we get a big driver in place that gets the market really nervous and worried,” Ken Ball of PI Financial in Winnipeg said canola will pull back.

He suggested the dryness across the Canadian Prairies could become a major issue if there’s insufficient moisture by seeding time.

After a stretch of declines, Ball said ICE canola futures received support from seasonal rebounds and from some short covering. However that rally hit pause on Mar. 13 due to an increase in farmer selling. Cash prices for canola on Mar. 12 hit C$14 per bushel.

“We are hearing reports of growers selling canola in droves,” Ball said, noting they hung onto it for most of the winter and were now eager to sell it ahead of spring planting.

“This is really a golden opportunity to do it,” Ball advised.

On the downside of the equation, he noted that canola exports remained in the doldrums. The Canadian Grain Commission reported that as of Week 31 of the 2023/24 marketing year those exports were 3.44 million tonnes, while the same time the previous year they were 5.31 million.

“Canola exports unfortunately are getting worse and worse,” Ball said.

During the past week there were unconfirmed reports of China having purchased upwards to 600,000 tonnes of Canadian canola. He cautioned there was similar scuttlebutt of China buying 400,000 tonnes of canola in December, and another rumour for 300,000 tonnes in January – but nothing has yet to show up in the CGC’s monthly report.

Ball pointed out that doesn’t necessary mean China had not made any of those purchases, rather it could be those amounts of canola had yet to be shipped out of Canada.

“The price of canola has become more attractive, so it would be logical to expect some uptick in exports finally at these levels. Especially with [Malaysian] palm oil getting more expensive,” he said.

— Glen Hallick reports for MarketsFarm from Winnipeg. 

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A total of 10.523 million tonnes of canola were crushed in the country in 2023, which was up by 20.0 per cent from the previous year and above the previous record of 10.290 million tonnes set in 2020.

Meanwhile, Canada’s soybean crush decreased by 5.7 per cent in 2023 to 1.763 million tonnes. Oil production totalled 4.422 million tonnes for canola and 329,856 tonnes for soybeans. Meal production totalled 6.200 million tonnes for canola and 1.371 million tonnes for soybeans.

High prices and increased exports of canola oil were behind the strong canola crush pace, according to StatCan. In 2021, the price of canola oil increased by 65.2 per cent over the previous year, and it has remained elevated ever since. In 2023, Canadian exports of canola oil increased 20.3 per cent from 2022, totalling 3.150 million tonnes. This trend was underpinned by higher supplies of canola, as production of canola was 31.2 per cent higher leading into 2023 than in the previous year.

In the United States, over the 2023 calendar year, oilseed processors crushed 61.268 million tonnes of soybeans which was up by 2.6 per cent from the previous year. A total of 2.059 million tonnes of canola was crushed in the U.S, marking a 19.2 per cent increase from 2022. Oil production totalled 12.052 million tonnes for soybeans and 825,227 tonnes for canola, while meal production totalled 45.241 million tonnes for soybeans and 1.198 million tonnes for canola.

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For the 2023/24, the CGC tallied year-to-date canola exports from licensed facilities at just under 2.51 million tonnes versus the 3.56 million this time last year. As well, December exports fell back to 375,300 from the 799,100 tonnes a year ago.

China remained Canada’s top canola customer, taking in 271,300 tonnes in December, but that’s down from the 383,600 tonnes they imported the previous December. China’s year-to-date imports amounted to 1.64 million tonnes compared to the 1.76 million in December 2022.

Canada’s number two customer, Japan, also reduced its canola imports when comparing December to December at 44,600 tonnes versus 140,400. Japan’s year-to-date reached 429,900 tonnes when a year ago they brought in 530,800.

Even Canada’s number three customer, Mexico, slashed their canola imports in December. A year ago they purchased 179,200 tonnes but this past December they didn’t import any canola. That dropped their year-to-date to 228,100 tonnes versus 632,000 in December 2022.

In the meantime, the United Arab Emirates and the United States imported more canola than Mexico in December, at 39,600 and 19,800 tonnes respectively. While those for the UAE were down from 59,700 tonnes a year ago, U.S. imports surged from 7,200.

Although Canada’s total wheat exports were up from 2022/23, the country by country story was mixed, according to CGC data. As with canola, China continued to be Canada’s top wheat buyer at 262,700 tonnes, but that’s down from the year ago of 371,400. China’s year-to-date imports were also behind at 1.26 million tonnes versus the 1.74 million this time last year.

While Indonesia was Canada’s second top importer, their purchases slipped to 238,400 tonnes this past December from the year ago of 285,600. However, the year-to-date of 994,400 tonnes exceeded last year’s pace 774,100.

There was marked improvement in Canadian wheat going to the European Union, with the latter’s December imports at 93,700 tonnes versus the mere 11,000 a year ago. The year-to-date was also much improved at 559,800 at the end of this December compared to the 268,900 the previous December.

Canada’s total amber durum exports were lower so far this year as well, at 1.24 million tonnes at the end of December compared to 1.92 million a year ago. For December alone, durum exports came to 247,100 tonnes, down from 356,000 in December 2022. Customers such as the EU, Morocco, Tunisia, and the UAE sharply cut their acquisitions from Canada.

— Glen Hallick reports for MarketsFarm from Winnipeg.

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“We seem to have found some degree of support… we’ve hit some swing targets in canola just above C$600 (per tonne)” said Ken Ball, of PI Financial in Winnipeg. He noted that while there were no significant supportive features in the market, short-covering ahead of the United States Department of Agriculture’s monthly supply/demand estimates on Jan. 12 could provide a nearby boost to the market.

Malaysian palm oil has moved up for five days in a row, while Chicago soyoil has also shown some stability, underpinning canola.

However, “with a big South American soybean crop coming… any bounce we see will likely be fairly routine,” said Ball.

He added that Canadian canola exports were running a million tonnes behind the year-ago pace, and the resulting likelihood of rising ending stocks would limit any upside potential. On the other side, Ball placed chart support around C$580 to C$600 per tonne.

— Phil Franz-Warkentin is an associate editor/analyst with MarketsFarm in Winnipeg. 

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