The spread between old-crop canola and new-crop contracted during the week of March 24-31, as the May contract will soon lose its relevance.
Russia’s invasion of Ukraine provided a powerful impetus for global oilseed prices to spike, as crude oil’s strong prices provided plenty of support to its edible cousins. International economic sanctions placed against Russia and its gaggle of oligarchs loyal to President Vladimir Putin gave rise to crude oil prices, as the country is one of the world’s top exporters.
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Canola market sees up and down week
Canola futures endured a topsy-turvy week ended July 17, 2025, with most ICE contracts seeing net gains of about C$15 per tonne.
That lack of supply, with a growing demand for crude oil as the world attempts to come away from the COVID-19 pandemic, set in motion those hefty increases. Granted, oil was already on the rise because the OPEC+ alliance, which includes Russia, was being stingy on production increases so as to reap the rewards of higher prices.
As the war in Ukraine carried into its second month, Russia suddenly announced on March 29 it would scale back its offensives to take the Ukrainian capital of Kyiv and the northern city of Chernihiv. On that day of trading, the markets bought the Russian pronouncement lock, stock and barrel, and down went crude oil prices.
That of course generated steep declines in edible oils, with the Chicago soy complex falling toward its daily limits for soybeans, soyoil and soymeal. That meant the spillover took canola along for the ride, but the Canadian oilseed didn’t get too close to its limits. In fact, when all was said and done, canola regained a good amount of its losses, as old-crop May lost $9 per tonne, and new-crop November stepped back $8.10.
Even the day after, when the markets realized their folly and crude corrected, canola was one oilseed not completely in lockstep with the other edible oils.
All of this has indicated some independent strength in canola, which has appeared from time to time over the past month. As devoted a follower canola is to the soy complex, it will go its own way when given reason to do so.
Such was also highlighted on March 31, when U.S. President Joe Biden announced up to one million barrels of oil will be extracted from the country’s strategic reserves for the next six months. That of course generated a good pullback in the soy complex, but canola ended the day mixed.
As trading in the May contract winds down, that massive long position needs to be dealt with, or big trouble will be ready to pounce. During the course of this week, the nearby May contract lost $14.20/tonne, while November gained $9.20.
As spring planting approaches there hasn’t been much to trade in old-crop canola. The commercials are said to be on the sidelines as the specs scurry out of their longs. Despite the power the soy complex normally has over canola, it’s been the locals, and whatever algorithms, generating the ebbs and flows in the oilseed.
The jury remains out on spring planting: is there enough soil moisture from the snowpack, or will the ground be too dry? The markets have banked on a decent spring, with hopes of sufficient rain through to harvest, and ideas of yields being average to above average.
Whether that pans out or not, canola in 2022 is certainly in for one heck of a ride.
