ICE Futures canola contracts held relatively rangebound as the clock ran out on the 2024/25 (Aug/Jul) marketing year. Tight old crop supplies and uncertainty over new crop production provided support, but speculative fund positioning led to some choppy day-to-day activity.
The managed money net long position in canola hit a record large level of about 139,000 futures contracts in late-June. That slowly slipped through July but remained historically large as of July 22 at 86,000 contracts (105,175 long/19,110 short). With total open interest in canola at about 225,000 contracts, the fact that the funds account for about half of that volume means that they can easily push the market to suit their whims.
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While that speculative trade leads to daily volatility, the underlying fundamentals will remain highly influential in the longer term.
Canada exported 9.5 million tonnes of canola through 51 weeks of the 2024/25 marketing year, which was well above the 6.8 million tonnes with only a week left to go in the previous crop year, according to Canadian Grain Commission data. Domestic disappearance was also strong, about 300,000 tonnes ahead of the year-ago pace at 11.2 million tonnes as of July 27.
Statistics Canada raised their old crop production estimate at the end of June to 19.2 million tonnes to help account for large usage numbers. However, even with that bigger crop, canola ending stocks look like they’ll slip below a million tonnes as of July 31 — which is generally deemed as very tight for the oilseed.
Agriculture and Agri-Food Canada is forecasting canola production in 2025/26 at 17.8 million tonnes. If realized, that means demand will need to be rationed going forward as an export pace like 2024/25 would be unsustainable.
Higher prices would be one thing that would limit some demand, but outside factors may also come into play this year. Notably, China has begun testing the waters of importing Australian canola after years when phytosanitary concerns limited that trade. Australia grows far less canola than Canada but is at a freight advantage to China and could easily take away some market share.
Ongoing tariff and trade uncertainty also continues in the background. A Chinese anti-dumping investigation into Canadian canola should have some results in the fall, while the U.S. demand for Canadian canola oil remains up in the air.
From a chart standpoint, November canola fell below $700 per tonne in the last week of July, with that psychological mark now representing a potential upside resistance target. On the other side, the next major support comes in at around C$670 per tonne.
