Canola prices were strengthening toward the end of August as the world canola supply balance began to show signs of tightening. Then, on Sept. 2, the canola market fell precipitously after China announced it was initiating an anti-dumping investigation into imports of canola from Canada. This was in retaliation to recent tariffs being put on Chinese electric vehicles, steel, and aluminum by the Canadian government. The canola market dropped over $23 per metric ton (MT) the day of the announcement and an additional $11 per MT the next day. Since then, the market has been up and down but has again settled at this level as of Sept. 11.

There have been mixed reactions to the news with several market analysts claiming that China has few options to find canola on the global market with the supply of canola getting tighter. Australia and Ukraine are the only two other canola exporting countries that could supply canola to China.

Production from Ukraine will be down considerably this year, and its closest export market is the European Union, which will need increased canola imports in the coming year due to its poor crop. Australia has not exported canola to China in any meaningful amount in four years and is not set up to meet the strict dockage limits imposed on canola at this time. China also has a strict zero-tolerance limit on blackleg that is difficult for Australia to meet. Both the dockage limits and the blackleg phytosanitary issues would have to be resolved in order for Australian canola to begin to flow to China.

So, the market will determine if China cannot find the canola it needs, it may possibly import more soybeans. Industry observers say that is the question that remains to be answered in the coming months. There has also been recent speculation that China may put tariffs on U.S. soybeans. Since the announcement of the anti-dumping investigation, canola has dropped 7.3 percent while soybean oil has dropped 6.4 percent.

The drop in U.S. canola prices shows that the market for canola is truly a North American market and any geopolitical factors that affect Canadian growers directly affect U.S. canola growers.

The canola harvest in North Dakota is nearing the halfway point and there have been some reports of lower yields in areas where moisture was limiting. No quality issues have been reported, although there have been some reports of clubroot in the northeast area of the state. These reports have been limited and growers are encouraged to sanitize equipment and lengthen rotations in these situations. The main defense against clubroot is resistant canola varieties, which have been very effective in limiting losses to this disease.

The U.S. Energy Information Administration reported in the latest feedstocks consumed for production of biofuels report that 386 million pounds of canola oil was consumed for biofuels in June. Of that, 162 million pounds went into biodiesel and 224 million pounds went into renewable diesel. Through the first half of the year, 2.1 billion pounds of canola oil has been used for biofuels, up 34 percent from the same time last year. Yellow grease, including imported used cooking oil, continues to reach record levels of use for biofuels, topping 714 million pounds in June, up from 481 million pounds in June 2023.

The November ICE canola futures finished on Sept. 11 at $569 per MT, down $.70 on the day and down $26 in the last two weeks. The January ICE canola futures contract closed at $582 per MT, down $.70 on the day and down $24 in the last two weeks.

Local cash prices as of Sept. 11 at nearby crush plants ranged from $17.35 to $18.35 for September and October deliveries, down approximately $1.35 per hundredweight in the last two weeks. November and December canola prices ranged from $18.00 to $19.30, down $.70 to $1.20 per hundredweight in the last two weeks.

Weekly crop progress reports for North Dakota show that canola crop ratings dropped in the last two weeks to 69 percent rated good-to-excellent, down from 76 percent. Forty-three percent of the canola crop has been harvested, near 40 percent last year.

In Montana, 75 percent of its canola has been harvested, up from 67 percent last year.

The Northern Canola Growers Association will hold its Annual Meeting in conjunction with the U.S. Durum Growers Association again this year at its Crop Outlook and International Durum Forum on Nov. 6-7 at the Grand Hotel in Minot, N.D. The keynote speakers will be Jerry Gulke and Dr. Bill Wilson. Be sure to mark your calendar for this event.

Source: Farm and Ranchguide