Glacier FarmMedia | MarketsFarm – As canola futures try to regain the ground lost during the week of March 10, the longer term outlook for the oilseed is very unknown, according to risk advisor and trader John De Pape of The Trading Floor.
De Pape said canola futures were overdone that week after China announced a few days earlier it would impose a 100 per cent tariff on its canola meal and oil imports from Canada effective March 20. In 2024, China acquired more than two million tonnes of Canadian canola meal and about 15,350 tonnes of oil, according to Statistics Canada data. That made China Canada’s number two foreign buyer of meal while fourth in oil.
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“If we’re not shipping oil and meal to China, where’s it going to go?” De Pape posed.
The feeling in the canola trade is other markets are willing to import Canadian canola meal and oil, but the realigning would take some time.
De Pape stressed those sharp declines in canola have a silver lining.
“I think this makes (Canada) more competitive in exports,” he said, but acknowledged there would still be a negative impact on farmers due to the lower prices.
“We get hammered because of panic. We stay down there because of uncertainty,” De Pape added.
Canola recovering
In the first three sessions during the week of March 17, the May canola contract reclaimed almost C$24 of the C$84.50 per tonne it lost the previous week.
As for the rest of March, De Pape plainly stated he doesn’t know what will happen to canola prices. Besides China’s threat of stiff tariffs on the meal and oil, there’s the looming issue of United States tariffs come April 2.
Although U.S. President Donald Trump often repeated, he’s determined to slap reciprocal tariffs on other countries, no one knows exactly how those levies would be implemented and on what products.
“With him in the White House, the only thing that is certain is uncertainty,” De Pape commented. “Nobody knows what he’s going to do.”
