Canada Markets

Just three months ago, spot prices of canola and rapeseed oil were near their lowest levels in three years, ending a winter season with an uneventful lack of demand, even while domestic canola crush in Canada remained active. Both prices got a lift in March when palm oil prices started climbing higher, a combination of lower production in Malaysia and stronger world demand.

It was after the April 20 weekend when rapeseed prices got a further boost from widespread frost across northern Europe, worsened by excessively wet conditions that are still bothering crop development in early June.

According to the International Grains Council (IGC), the European Union recently trimmed its estimate of rapeseed production in the European Union to 19.1 million metric tons (mmt), down from 19.7 mmt a year ago. IGC estimates Canada's canola production at 18.1 mmt in 2024-25, down from 18.3 mmt the previous year.

In the bigger picture, USDA expects world vegetable oil ending stocks to be down 6% in 2024-25 to 29.91 mmt. World rapeseed oil production, which includes Canada's canola oil, is expected to be down 18% to 2.83 mmt, the lowest in three years, if true. These early estimates are not dramatically bullish for canola and rapeseed, but do suggest some merit to the recent price rallies in both commodities.

Technically speaking, both appear to have encountered resistance in May. November canola hasn't seen a trade at C$500 per metric ton since December 2023 and August rapeseed hasn't seen 700 euros since last summer, but prices got close to both levels in May. Where prices go from here will have a lot to do with weather. In Canada, the planting pace has picked up, but chances for rain persist with cooler weather in early June. In Europe, crop conditions have remained excessively wet and there may be more reductions in crop estimates ahead.

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Comments above are for educational purposes only and are not meant as specific trade recommendations. The buying and selling of commodities, futures or options involve substantial risk and are not suitable for everyone.

Todd Hultman can be reached at Todd.Hultman@dtn.com

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