Canadian farmers say they intend to plant less canola this year, although new trade challenges mean the drop could be more severe.
A Statistics Canada acreage report on Wednesday pegged new-crop canola planting intentions at 21.646 million acres, down 1.7% from a year earlier. That is potentially the lowest since 21.395 acres went into the ground in 2022, although still comfortably above the Agriculture Canada new-crop supply-demand forecast of 21 million.
However, the StatsCan number is already open to debate. The estimate is based on a survey of 8,200 Canadian farmers between Dec. 13 and Jan. 27 – long before the canola market was impacted by US President Donald Trump’s threats to levy a 25% tariff on American imports of most Canadian goods, including grains and grain products. That threat has been paused until April 2 but lurks in the background as the planting season draws nearer.
Meanwhile, China announced over the weekend that it would slap 100% tariffs on imports of Canadian canola oil and meal beginning March in response to the Canadian government’s decision last fall to put tariffs on Chinese-made electric vehicles, steel, and aluminum products.
Canola futures suffered limit losses on Monday, posted further losses on Tuesday and were trading lower again this morning in response to the China tariffs. In fact, in just two full days of trading this week, the nearby May contract lost more than 8% of its value.
The drop in canola prices, combined with the risk of even more tariffs from the US, is likely to send some producers back to the drawing board in terms of their new-crop planting plans, although rotational considerations, along with input costs – especially as trade uncertainty pushes fertilizer prices higher - will probably continue to be major deciding factors as well.
In the largest canola production province of Saskatchewan, StatsCan said producers intend to plant 12.229 million acres of canola, up 1.2% from a year ago but still below 12.4 million in 2023. Alberta canola area is estimated at 6.11 million acres, down 4.3% on the year and the lowest since 2020. Manitoba producers said they intend to plant 3.121 million acres of canola, a drop of 6.4% from 2024 and the lowest since 2011.
