China has began to buy Canadian canola again after a trade deal struck. As China has said many times in the past, China will do what is best for China. This is the case with this deal. In exchange for allowing the import of 49,000 Chinese EV’s into Canada, China has reduced the import tariff on Canadian canola. This will mean that Australian canola will need to be price competitive with Canadian canola if it is to secure further sales into China.
Currently we see Canadian canola values at US$527 C&F China, + 15% tariff (was85%) = US$606.05/t, compared to Australian canola which would come in closer to US$590, plus trade margin and insurance. So it will be close but may pressure Aussie basis to Winnipeg in the mid term.
For those looking to figure out if they want to sow canola in 2026, January / February is generally not the time to get reliable market feed back. The Canadian crop is a long way from being sown, let alone having a reliable production estimate.
The only real tool we have is the futures market and a stab at some S&D tables. Winnipeg canola futures closed at CAD$658.30 / tonne in the May slot last night and CAD$656.40 / t in the November slot. That’s not a lot of carry or volatility. S&D tables look ok but without a Canadian and Australian production number with some form of reliability the S&D tables are very speculative. From a budgeting perspective, I guess if you could make canola work at current values AUD$740 XF +/- P&Ds, than you have your input data.
The good news is that Aussie canola passed port inspection at China and will start to be processed over the next week or so. China picked up about 500kt of Aussie canola to “test”, while the Canadian tariff was applied. Delays in processing were a concern but with the recent progress it may still indicate that at the right price Aussie canola can still move in volume into the Chinese market if need be.
Tunisia picked up 100kt of soft wheat and 100kt of durum mid week. The durum was estimated to have been bought at US$323.89/t C&F for March / April. This is a tad under their last tender, and equates to an XF LPP equivalent price of roughly AUD$325, not very encouraging.