There’s little doubt among market participants that this year’s canola harvest exceeded the 20.03 million tonnes Statistics Canada estimated in September. We’ll get a good idea as to how much canola came off the fields come Dec. 4, when StatCan issues its next production report.

Nevertheless, there’s a lot of canola to be had across the Prairies. But without China buying canola from Canada, the impetus for farmers to sell it simply isn’t there. Not long ago the idea was for growers to get rid their canola on the idea a trade deal between Canada and China won’t come in 2025. That an agreement between Ottawa and Beijing is more likely to be reached sometime in 2026.

However, even without China there’s still sufficient demand for canola that the commercial buyers are wanting it, so prices have climbed.

Although the Canadian government said recently there was some progress in trade talks with China, there’s been nothing more on that front. In turn, those stiff tariffs China imposed on Canadian canola seed, oil and meal imports will continue to loom over the market until some deal is reached.

Canadian Grain Commission data shows 4.87 million tonnes have been delivered by farmers so far in 2025/26, 1.12 million tonnes less of the oilseed than they did a year ago. That decline is now underpinning demand, as the commercials are trying to entice reluctant sellers.

Just where do canola futures go in the weeks to come? That remains in the air. Rallies always come to an end; it’s just a matter of having an idea as to when.

Canola could go higher, but likely fresh news will be needed to give the trade something more to bite on. Should the market fall back, then canola could stay rangebound with the January contract finding support at $600/tonne.

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The back-and-forth flow of speculative money in reaction to whatever geopolitical news is available can be expected to account for much of the activity in the grain and oilseed futures over the next few weeks.

Thawing trade relations between the United States and China gave the soy market a boost to end October, as Presidents Donald Trump and Xi Jinping met in South Korea and apparently reached a deal. Actual details were still lacking nearly a week later. However, the headline news that China would be buying at least 12 million tonnes of U.S. soybeans over the next two months and another 25 million tonnes per year for three years in exchange for the easing of some U.S. tariffs was enough to take bean futures to their highest levels in 16 months.

Canadian Prime Minister Mark Carney also met with Xi. Both leaders had positive things to say about improving trade relations between their countries after the meeting, lending a glimmer of hope to the canola market. However, there was no concrete movement, and the Canadian oilseed is still facing stiff tariffs into what had been its largest customer.

Canola will eventually find a home as the world trade flows adjust themselves. However, the price at which that business occurs remains to be seen.

Weekly export data from the Canadian Grain Commission shows Canada exported 1.2 million tonnes of canola through 12 weeks of the current marketing year. That compares with 2.9 million tonnes at the same point a year ago. At that pace, yearly canola exports are only on target to hit 5.2 million tonnes, which would be well short of the 9.5 million tonnes moved in 2024/25.

Looking at the charts, the seasonal lows appear to be in for the time being, but the upside is also limited, and canola futures could chop around in a sideways range without any developments on the trade front. The January contract appears to be facing stiff resistance around $650 per tonne, with support in the $630 to $635 area. Meanwhile, soybeans gapped higher on the charts with a move above US$11 per bushel in the January contract now creating a new support level. If that US$11 fails to hold, the next support comes in at around US$10.60 to US$10.70/bu.

U.S. soybean export shipments are also off to a slow start, with the 7.8 million tonnes moved through nine weeks, the lowest level for this time of year since 2011. Traders will be watching to see if the rumoured Chinese purchases materialize in the weeks ahead, although there is some added uncertainty as the ongoing U.S. government shutdown limits the available data.

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The canola market received a shot of positive vibes heading out of the Thanksgiving weekend, with comments from China’s ambassador to Canada claiming China would end its tariffs on canola if Canada stopped its own levies on Chinese electric vehicles. This was seen as a thawing of trade relations between the two countries. Canola futures climbed to their highest levels in a month in subsequent sessions, outperforming the Chicago soy complex even without any actual concrete developments on the trade front.

While Prairie premiers and others in the ag sector ramped up their calls for the federal government to do something to end the impasse with China, halting tariffs on Chinese EVs seems highly unlikely given the importance of the auto sector to vote-rich Ontario.

Prime Minister Mark Carney said at a press conference that he expects to meet with Chinese leaders later in October but would not single out electric vehicles or canola as bargaining chips. Rather, he said the countries were talking about “a much broader range of issues than single sectors and single trades”.

Canadian foreign minister Anita Anand met with her Chinese counterpart in Beijing during the week, with canola and electric vehicles part of the discussions. The futures saw some modest strength on the mere mention of constructive talks, but once again there were no actual developments.

Exports

China has been Canada’s largest destination for canola seed in recent years, with their absence at the start of the 2025/26 marketing year definitely cutting into export movement. Canola exports through 10 weeks of just under a million tonnes compare with 2.3 million tonnes moved by the same point a year ago, according to Canadian Grain Commission data. However, this is also not the first time Canada has faced disruptions moving canola to China. Previous tariffs on direct business led to shifts in trade flows like increased sales to the United Arab Emirates, who crushed the seed and sent the processed oil and meal to China. Canada can also expect to sell more to other customers like Europe, Japan, Mexico and the U.S. However, that movement may be at a lower price than Canadian farmers would like to see.

Barring any real developments on tariffs beyond shifting vibes, canola will likely hold in a sideways range. The $600 per tonne level offers good support in the November contract, with resistance at $625.

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With a “head and shoulders” pattern developing on the charts, a move down to the March low of $580 per tonne is possible if support fails to hold at $600. On the other side, nearby resistance can be seen at the 20-day moving average around $620.

Canola prices may have found some reprieve from harvest pressure and a lack of demand from China through some bargain-buying, but the main driver was spillover from a rising Chicago soy complex.

CBOT November soybeans and December soyoil found their own support levels at US$10 per bushel and 50 U.S. cents per pound, respectively, but a social media post by U.S. President Donald Trump on Oct. 1 saying he’ll talk to Chinese President Xi Jinping about China’s lack of purchases later this month rallied the market. Treasury Secretary Scott Bessent also hinted at an announcement on Oct. 7 regarding assistance for soybean growers.

Both Trump and Canadian Prime Minister Mark Carney want to discuss soybeans and canola, respectively, with Xi, but they have their own matters to deal with. Trump is in the middle of a federal government shutdown resulting in thousands of furloughs and firings, while Carney needs to find support from other political parties to pass the federal budget next month and avoid a non-confidence vote. Oilseeds won’t be on top of their respective agendas.

We can only wait and see if canola’s and soybeans’ rallies have lasting power. Manitoba and Saskatchewan still have approximately 25 per cent left of their canola harvests to complete and should be finished in a matter of weeks. At around the same time, South America’s soybean crop will come off the ground and enter the market, resulting in a new round of Chinese soybean purchases and less demand for U.S. soybeans worldwide. Will oilseeds continue getting support or will their rallies turn out to be dead cat bounces on the way down?

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At the heart of the matter stood those 25 per cent tariffs United States President Donald Trump keeps saying he will impose on most goods his country imports from Canada and Mexico. One exception will be energy-related goods, which are to be levied at 10 per cent.

Before getting elected to a second term, Trump boasted he would slap his tariffs on Canada and Mexico the day he was sworn in, Jan. 20. Then came the first delay to Feb. 4 followed by a second postponement to March 4.

The White House left the door open to a third push back to April 2 after Trump uttered that date during a cabinet meeting. Later that day, the president comments were corrected to March 4, which he reiterated on Feb. 27. However, a White House spokesperson mentioned the ongoing negotiations over tariffs could see that postponement to April 2 come to fruition. If such a move occurs it will likely be at the eleventh hour, with Trump’s verbal ‘water boarding’ to continue.

Should Trump’s tariffs get the go-ahead, it’s now believed Canada’s tightening canola supply won’t be enough to stem any downward tumble. It would be a question of how far canola drops. It’s also a question of how long these levies and Canada’s retaliatory measures are in place. They could be around for the long haul, but there are some in the trade who believe the coming trade war would last for maybe a few months.

Let’s also keep in mind there’s more affecting the price of canola than the daily utterances from the Oval Office. Brazil is having a whopper of a soybean harvest and that is putting pressure on Chicago soybeans, which in turn weigh on canola values.

And while so much focus is being placed on Trump’s tariffs, there’s still that punitive action China has said it will inevitably take against Canadian canola.

Very little or nothing has been said recently about China’s so-called investigation in allegations of canola-dumping by Canada. Chinese officials said earlier their investigation would take a year, but there might be some interim measure before then.

China’s action was taken in retaliation for Canada imposing a 100 per cent tariff on imports of Chinese-made electric vehicles as well as hefty levies on steel and aluminum imports. Keep in mind Canada was acting in concert with its allies, who slapped similar tariffs against China.

That allegiance may have set Canada up to take one for the team, but that’s neatly forgotten when it has come to Trump’s dubious claims about Canada being subsidized by the U.S., fentanyl pouring across the Canadian border into the U.S., along with hordes of migrants.

Remember, this is guy who claims the U.S. doesn’t need Canadian oil but is now determined on getting the Keystone XL pipeline going again to bring in more Canadian crude.

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The canola market climbed above $650 per tonne for the first time since November, with the next upside target from a chart standpoint $20 to $30 per tonne higher. The U.S. is a major buyer of Canadian canola oil, meal and seed — and there had been concern that U.S. trade threats would hamper that business.

In the absence of a trade war, the fundamentals are also generally supportive for canola as supplies are tightening and both exports and the domestic crush continue to run at an unsustainable pace.

Statistics Canada reported canola stocks in the country as of Dec. 31 at 11.382 million tonnes, which compares with 14.087 million at the same time a year ago and marks the tightest level for this time of year since the drought year in 2021.

The tighter stocks are supportive and the U.S. tariffs on Canadian imports may have been postponed, but the threat hasn’t gone away and many market participants were uncertain what to make of the general chaos brought on by the Trump administration. On top of possible tariffs, the entire U.S. biofuel sector may also be in the U.S. president’s crosshairs.

Canadian canola has seen spillover support from increased demand from U.S. biodiesel producers over the years. However, renewable fuels could easily be on the new administration’s chopping block despite broad support from farmers.

While the trade and biofuel worries may be bearish, Chicago soybeans and corn both hit multi-month highs of their own in the early days of February. Mexico is a major importer of U.S. corn, and the pause on a trade war between those two countries was supportive. Mexico also announced it would repeal its restrictions on genetically modified corn — opening the door for more business.

Dryness concerns in Argentina added to the general firmness in soybeans, although heightened tensions with China and the advancing Brazilian harvest tempered the upside.

U.S. President Donald Trump increased tariffs on Chinese imports by 10 per cent, and China retaliated in kind by announcing its own tariffs and bringing a complaint to the World Trade Organization. However, China’s measures did not include soybeans or corn for the time being.

The general uncertainty is not likely going away any time soon and will keep markets on edge for the foreseeable future.

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The downside continues to be the looming threat of tariffs by the new Trump administration. United States President Donald Trump seems to thrive on winding up people to generate endless controversy, something he’s successfully done with his threat of 25 per cent tariffs on all goods the U.S. imports from Canada and Mexico.

The latest from Trump is he will slap those tariffs on both countries as of Feb. 1. Perhaps blinded by his own stream of rhetoric, Trump has paid little, if any, heed to the negative impact those tariffs will have on all countries involved, including his own.

Those tariffs could shove Canada into an economic recession and the impact on canola would certainly pull prices down. Added to that is the uncertainty in the U.S. over the federal government’s biofuel tax credits.

A few years ago, Canadian canola oil found a terrific conduit into its neighbour’s biofuel industry after it was deemed to be an acceptable biofuel feedstock. Now exports of canola oil are heavily dependent on that U.S. market.

Then in the dying days of the Biden administration, changes were made to the tax credits with canola being excluded. Initial hopes were that during the required 60-day review period, canola would be reinstated, but the chances of that are slipping away due to Canadian canola likely unable to meet the carbon requirements.

All of this may be for naught as the Trump administration appears to be quite set to take a very dim view on biofuels. The incoming secretaries of agriculture and energy, along with the new head of the Environmental Protection Agency reportedly are rather disdainful towards biofuels and the tax credits could end altogether.

Lurking in the background is the ongoing threat of trade action China could take against Canadian canola. Whether China waits until its so-called investigation into Canada dumping canola is completed, a heavy hammer is bound to slam down on the oilseed.

Meanwhile, canola’s saving grace could be its strong exports and domestic use. Both are currently at a pace that would outstrip available supplies, meaning price rationing will need to make its presence felt during the second half of the 2024/25 marketing year.

How much canola gets planted this spring will be guided by whether prices have tumbled because of Trump or spiked because there’s just not enough to go around.

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While the outlook is murky for 2025, expect similar outside forces to remain a feature in the year ahead.

Russia/Ukraine: The conflict moved through its third year with no end in sight. Attacks on grain handling facilities, difficulties shipping through the Black Sea and shifting production estimates out of both countries were followed closely by traders. Russia remains a major player in the global export market, but production uncertainty for the current winter wheat crop may limit that influence over the next year.

Middle East: The Israeli war against Hamas in Gaza sparked wider disputes across the region. Resulting turmoil in energy markets was also felt in grains and oilseeds, while trade through the Red Sea and Suez Canal was hampered.

Panama Canal: Low water levels at the Panama Canal created additional headaches for global grain movement in 2024, although that congestion eventually started to clear. The Baltic Dry Index, which provides an indication of global bulk shipping rates, was at its lowest level in 17 months in December. Lower rates are generally beneficial for Canadian grain exports because the country is at a freight disadvantage into many markets.

Labour disputes: Labour unrest was a feature of the Canadian grain trade in 2024, with strikes and/or lockouts at both coasts and at both major railways.

China: China began an anti-dumping investigation into Canadian canola in the fall. China remains the largest export customer heading into the New Year, but the threat of another trade dispute between the two countries is ever present.

Trump: Trump’s new administration is bound to generate headlines through 2025, but his proposed policies already riled agriculture markets ahead of his inauguration. Most notably, import tariffs and resulting retaliation could dramatically alter international trade flows. Uncertainty over U.S. biofuel policy was also overhanging the markets as the calendar flipped to 2025.

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The ongoing tariff threat from China continued to loom over the canola market, as did the threat from United States president-elect Donald Trump. No matter how much canola prices increased during the last few months, there was at least one threat poised to erase all gains — and then some.

Added to that is uncertainty surrounding Trump’s policies for biofuels. Although many of his supporters in Congress hail from “red states” in which corn and soybeans are extremely important, the incoming president exudes an air of disdain for biofuels. It might not matter to Trump that he could easily jeopardize the agricultural industry in those states.

There are lingering questions of what tax incentive the U.S. government will offer the biofuel industry. A good amount of that uncertainty rests with the outgoing Biden administration and Congress. Would the current incentives that favour biofuel manufacturers be kept or would something that benefits farmers replace it?

Expansion in the U.S. biofuel industry was a big reason why that country is Canada’s number one customer of canola oil.

A ban on used cooking oil from China would further increase U.S. demand for canola oil, but if there’s little direction in the industry, that could weigh on canola futures.

Then there’s the speculation of China proceeding with some kind of levy against canola imports from Canada. Participants strongly suspect this has driven Chinese purchases — frontloading before the Chinese government drops its heavy hand with a tariff edict.

Whether or not Chinese authorities have completed their investigation into alleged canola dumping by Canada, at some point during 2025 China is likely going to act. After Canada slapped a 100 per cent tariff increase on Chinese-made electric vehicles, there’s a strong likelihood the government of Xi Jinping won’t let that slight slip by.

Not to be forgotten is South America, with huge soybean crops in Argentina and especially Brazil. The weather in both countries has been much more co-operative than a few months ago, and the influx of soybeans on the global market will weigh quite heavily on other oilseeds, including canola.

Calendar year 2025 may very well be a tough start for canola, but there’s room for optimism.

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North American markets saw notable declines in canola, the soy complex, corn and wheat.

Foremost in generating these concerns was Trump’s rhetoric about tariffs on U.S. imports. Should his administration proceed with those tariffs, there’s little doubt a trade war will begin with China, the largest buyer of U.S. grains and oilseeds.

The trade war with China during Trump’s first administration led to a massive increase in Brazil soybean production. Numerous estimates for Brazil’s 2024/25 soybean crop exceed 160 million tonnes. That’s at least 40 million tonnes more than before Trump was president. China turns to Brazil for the majority of its soybean imports. Another dispute could seriously harm U.S. soybeans.

Added to that are questions about where Canada fits in Trump’s tariff scheme, especially went it comes to canola oil exports. Levies could be devastating because the U.S. is Canada’s biggest foreign canola oil buyer.

Since the day after the election, January canola futures dropped $20 per tonne at $627.60. There’s an idea in the market that canola is stuck in a wide trading range that will continue until Trump is sworn in on Jan. 20. From there, who knows what looms?

January soybeans in Chicago gave up 50 cents per bushel during the same period, while December soyoil lost 1.94 cents per pound and December soymeal forfeited US$11.40 per short ton.

Also unfavourable to oilseeds is Trump’s pick for the next head of the Environmental Protection Agency. Former New York Rep. Lee Zeldin is said to be quite pro-fossil fuel and not too keen on biofuels.

Outside of the Trump administration, rain for major growing areas of the continental U.S. weighed on values, especially for wheat as conditions improved. Dry conditions in Brazil and Argentina have diminished as questions about each country’s soybean and corn output have been replaced with optimistic projections.

The North American commodities were already facing a bumpy road. Trump makes that road quite rocky.

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