Soybean futures at the Chicago Board of Trade climbed to fresh contract highs during the first week of February before running into some resistance. The Canadian canola market was also strong, but held well below its own highs as the relationship between the two commodities experienced some adjustment.
Canada’s tight supply situation has been well known for some time, which means there may not be much more room to the upside. Meanwhile, the soy complex has seen some fresh energy on the back of weather concerns in South America and general strength in outside energy and vegetable oil markets.
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Canadian canola prices hinge on rain forecast
Canola markets took a good hit during the week ending July 11, 2025, on the thought that the Canadian crop will yield well despite dry weather.
Canola had become very overpriced compared to the soy complex, and was thought to be due for a correction. While that sentiment could have sparked a larger sell-off, the timely rally in soybeans provided the same function without the need for any significant drop in canola prices.
Looking at the crush margins compiled by ICE Futures, the headline numbers at the end of December showed margins of negative $129 per tonne — which means processors would be losing that much for every tonne of canola crushed, given the headline oil and meal rates at the time.
While March canola in early February is only about $10 per tonne off where it was trading in early January, the crush margin has narrowed in to only $14 under the futures as soyoil has gained roughly 10 cents/lb., or 18 per cent, over the same time frame.
Crush margins in the more deferred months look even more favourable, climbing well above $100 per tonne above the futures for the new crop.
Domestic processors continue to show great demand, as they work to keep their operations running in the face of tight supplies. Basis levels for nearby delivery are coming in above the already-high futures.
Total canola exports through the first half of the 2021-22 crop year of 3.368 million tonnes are well behind the 6.199 million moved during the first 26 weeks of the previous crop year, according to Canadian Grain Commission data. The domestic crush has not lagged to the same extent but, at 4.671 million tonnes as of Jan. 30, is still down 13 per cent on the year.
In the U.S., soybean and corn markets are keeping a close eye on South American production prospects, as a number of forecasters have lowered their estimates for the continent despite recent rains.
Meanwhile, activity in wheat remains choppy, with the uncertain situation between Russia and Ukraine likely to keep some caution in the market for the time being. Dry parts of the southern U.S. Plains were seeing some much-needed moisture during the week, helping take some of the weather premium out of the market.
