Rapeseed market under tariff attack

• Trade war: Canadian canola oil and meal subject to 100% tariffs from China since March 20

• US tariffs on Canadian goods increase pressure on global canola market

• Inevitable market changes due to tariff wars

Canada:

• In October 2024, Canada introduced a 100% tariff on Chinese electric vehicles and a 25% tariff on steel and aluminum from China.

• In December 2024, Canada announced plans to extend tariffs to Chinese solar panels and critical minerals in early 2025, and to semiconductors, permanent magnets, and natural graphite in 2026.

China:

China will impose tariffs on over CAD $2.6 B of agricultural and food products since March 20 and include:

• 100% tariff on Canadian canola oil, cakes and peas

• 25% tariff on seafood and pork

The US tariffs on Canada since February 2025 exacerbates the negative impact on the global canola market.

USA:

25% tariff on imports of all goods from Canada, except oil and energy, which are subject to a 10% tariff.

Canada:

25 % on $30 B worth of U.S. goods, possibly rising to $155 B within three weeks.

The escalation of trade tensions will impact significantly the global market for canola seed, oil and meal, as Canada, the US and China are key players in these markets.

Canada accounting for 42% of world canola exports, 52% in the canola oil market, and 59% in the canola meal exports.

World exports of canola by country, oil and meal, 2024/25, M mt 

                                Source:  USDA  

USA as a Top Importer

• Rapeseed oil (47% of the global imports)

• Rapeseed meal (36%)

China is the second largest global importer of rapeseed (18% of total global imports), rapeseed oil (23%), and rapeseed meal (29%).

Global imports of canola/rapeseed, oil and meal, 2024/25 MY, M mt 

                                                                 Source:  USDA  

Most Likely Global Markets Trends  

• Reduction of trade flows

• Price increases in the importers’ markets as imports become more expensive for consumers

• Destabilization of supply chains and changes in commodity export destinations as market players seek alternative supply routes and new partners

• Instability in import- or export-dependent industries

• Increased price volatility as the market reacts to each decision (imposition/removal of tariffs).

Consequences for Canada:

• Shifts in canola export destinations. The top two buyers account for 60-70% of global imports of canola/canola seed/oil/meal. It is clear that there is no alternative for these buyers to avoid significant losses and trade declines. For example, in 2024/25 (July-December), rapeseed imports from Canada to the EU increase to 118.4 K mt (42.4 K mt last season). Tariffs could boost rapeseed imports even more, without completely solving the problem.

• Increase in carryover canola stocks and pressure on world prices.

• Reduction in 2025 canola acreage and production.

Trends for China and the US:

• Uncovered demand for canola oil and meal

• Increased canola acreage along with increased domestic canola crushing and oil and meal production.

• Search for alternative sources of oil and meal

• Partial shift to consumption of alternative oilseeds, veg oils and meals.

Scenarios for the EU 

• Canada may increase exports to the EU to compensate for the loss of the Chinese market.

• EU demand for rapeseed oil for biofuel remains strong (EU ban on palm oil for biodiesel).

Positive impact for Ukraine

• Expanded exports of rapeseed oil and meal.

• Increase in winter rapeseed acreage and production in 2026, assuming the tariff war continues.

• Increase in exports to China and the USA.

Other scenarios 

• Increased competition in the Chinese market from Russia, Kazakhstan, Australia and even Belarus.

• The European Union may import more Canadian rapeseed, reducing Ukraine's share.

• Possible logistical constraints. The war and restrictions on sea transportation may complicate exports to China.

• Potential pressure on domestic prices. If Canada increases exports to the EU, Ukrainian farmers will have to compete with Canadian canola in Europe. This could result in lower prices in Ukraine. The EU market remains a major export destination for Ukrainian rapeseed.

Australia

• Australia has a chance to take some of Canada's market share and could increase its canola supply, as it did in 2019-2020.

• Stable demand from China, and this demand could increase.

• The profitability of canola production will increase: If China increases purchases, rapeseed prices in Australia will remain high, which will affect the increase in area for the 2025/26 harvest.

Russia

• China may shift to Russian rapeseed, oil, and meal.

• Increased government support may encourage rapeseed acreage expansion.

• Russia is actively developing exports to Asia via China.

Kazakhstan

• China is the main market for Kazakhstan, so the country may increase rapeseed production.

• Proximity to China provides a logistical and price advantage.

History repeats?

In the past, Canada and China have had disputes over canola. In 2019, China suspended imports from Canada, citing phytosanitary reasons, but this was most likely a political reaction to some Canadian decisions.

The consequences of this canola war were very significant:

• Canadian canola exports to China fell by 70% in 2019.

• Canola prices in Canada fell by 10-15% due to the loss of a major market.

• Large canola surpluses in the domestic market.

• Farmers began to reduce canola acreage and look for alternative crops (barley, wheat, flax).

It took Canada several years to regain China's share of canola exports. Now China has imposed import tariffs on canola oil and meal, but it will have a similar effect.

Most likely, we will have the traditional end to all tariff wars - negotiations, mutual concessions on trade issues, and diplomatic agreements - but the extent of the consequences will depend on how quickly the traditions are in place.