Canola futures had something of a rough week on the Intercontinental Exchange for the week ended Feb. 27. Despite some topsy-turvy sessions, the most heavily traded May contract lost $22 to close at $658.10 per tonne.
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.
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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.
