The U.S./China tariff war seems to be increasing China’s appetite for Canadian canola.
The Chinese are avoiding U.S. soybeans due to a 25 percent tariff imposed in retaliation against American duties on products from China.
“China is looking for alternatives to satisfy their needs on oilseeds and protein supplements for feed rations,” says Mike Jubinville, a market analyst with Pro Farmer Canada. “They are buying a lot of South American soybeans, but they are looking for alternatives. Canadian canola and peas are factoring into that mix.”
Jubinville believes Canadian canola production will be in the neighbourhood of 21 million metric tonnes, close to last year’s production.
Even with that big number, he says strong demand from both China and Canadian crushers should keep carryover numbers in line.
“I see the demand element for the canola market looking quite strong next year to the point where I think we will see some mild contraction of ending stocks for the new crop marketing year.”
Jubinville sees market fundamentals suggesting the continuation of a long-term sideways trend that we’ve been in for over the past three years. Those prices have ranged between the lower $10 per bushel up to $11.50 to $12 per bushel.