Canola futures were tanking Monday morning in response to new Chinese tariffs on canola oil and meal announced over the weekend.
The nearby May futures was trading down near the $40/tonne daily limit, while new-crop November was about $20 lower (see May futures chart below). On the other side of the world, reports said Chinese rapeseed oil and meal contracts were sharply higher in reaction to the tariffs.
China’s State Council Tariff Commission said Saturday it will impose a 100% tariff rate on Canadian canola oil, canola meal and peas, with a 25% duty on Canadian pork and aquatic products. Set to take effect on March 20, the tariffs are retaliation for the Canadian government’s move last fall to slap levies on Chinese-made electric vehicles, steel and aluminum products.
In 2024, total exports to China were valued at almost $5 billion and included 2 million tonnes of canola meal, valued at $918 million and 15,351 metric tonnes of canola oil, valued at $20.6 million. In a down year in 2024, Canada exported roughly 500,000 tonnes of Yellow peas valued at over $306 million to China. The five-year average for Yellow pea exports is over 1.5 million tonnes, valued at more than $740 million annually. China has recently emerged as the largest market for Canadian peas, as India reduced its imports of Yellow peas.
The new tariffs from China represent a double blow for the Canadian agricultural industry, which is also wrestling with trade threats from the US. American President Donald Trump last week followed through with threats to levy a 25% tariff on most US imports from Canada, including ag products. However, Trump later pushed back the implementation of the tariffs until April.
Chris Davison, Canola Council of Canada (CCC) President & CEO, said China’s trade action will have a “devastating impact” on Canadian growers and urged the federal government to immediately engage with Beijing to resolve the situation.
“With this announcement Canadian canola farmers are facing an unprecedented situation of trade uncertainty from our two largest export markets only weeks before planting begins,” added Rick White, Canadian Canola Growers Association (CCGA) President & CEO.
With the impact of the federal government’s trade policy decisions now playing out at the farmgate, White said it is imperative Ottawa “respond with a plan for financial compensation commensurate with the losses incurred.”
The CCC noted the tariffs announced over the weekend are separate and distinct from China’s anti-dumping investigation into imports of Canadian canola seed which remains ongoing. Depending on the outcome of that investigation, there could be even more bad news for canola.
With the planned tariffs on Canadian canola oil and meal, analysts told Reuters today that China could seek out alternative sources of product, including both Russia and the EU. Anilkumar Bagani, research head of Mumbai-based vegetable oil broker Sunvin Group, also told Reuters it's possible the Chinese tariffs pressure Canadian canola prices enough to result in a “sharp decline” in product prices.
Bill Prybylski, president of the Agricultural Producers Association (APAS), said the Chinese and potential US tariffs are unsettling a provincial agricultural community also dealing with the Viterra-Bunge merger, which APAS believes could lessen competition in grain purchasing and lower prices. The recent shelving of plans by Federated Co-operatives Limited (FCL) to build a new renewable diesel facility and canola crush plant near Regina, and ongoing supply chain bottlenecks also leave farmers vulnerable, he said.
"We're confronted with a series of complex and unprecedented threats to our industry.”
Greg Cherewyk, President of Pulse Canada, called on Canada to swifty engage with China to come to a resolution over the tariffs.
“We believe that the tariffs announced. . . on Canadian peas, canola, pork and seafood represent an invitation to negotiate, not a retaliation nor the start of the trade war,” he said. “It’s in the best interest of both nations to recognize the positive contributions of agriculture and food to our economic wellbeing.”
May canola: Source – Barchart
