Record rapeseed production increases pressure on the market

Since December, ICE canola futures have been under sustained downward pressure. Domestically, canola meal and canola oil futures are experiencing similar pressure. Although they have recovered somewhat after a prolonged decline, the overall recovery is showing clear signs of weakness.

Global canola production forecasts have been revised upward, increasing supply pressure.

The Canadian canola industry is currently facing a structural dilemma: “bountiful harvests amid sluggish sales.” The main contradiction lies in the sharp contrast between record production volumes and extremely weak export demand. Specifically, Statistics Canada’s latest report confirms that the 2025/2026 canola harvest will total 21.8 million metric tons. This not only sets a new historical record but also significantly exceeds the previous market forecast of 21.25 million metric tons. Compared to the September estimate, this represents a significant increase of 1.77 million metric tons, or 2.56 million metric tons more than a year earlier—a significant increase of 13.3%. Coincidentally, the USDA’s December Supply and Demand report also raised Canada’s canola production forecast for the 2025/2026 season to 22 million metric tons, further strengthening expectations of a Canadian canola surplus. The unexpectedly strong increase in canola production in Canada is primarily due to favorable weather conditions and expanded planting area. This fundamentally alters the country’s canola supply and demand balance, putting significant downward pressure on ICE canola prices. Furthermore, upward revisions to production forecasts in Russia and Australia further reinforce the perception of a global canola surplus. In its December Supply and Demand Report, the U.S. Department of Agriculture raised its global canola production forecast for the 2025/2026 season by 3 million metric tons to 95.273 million metric tons. This included an increase in Russian production of 500,000 metric tons to 6 million metric tons, a 29% increase from the previous year, and an increase in Australian production of 500,000 metric tons to 7.2 million metric tons, a 12.5% ​​increase from the previous year. The combined production increases from these two major producers, coupled with record production in Canada, further tightened the global canola supply situation, increasing supply pressure in the international canola market.

Weak Canadian Canola Exports: No Chinese Market

However, despite strong supply expectations, Canadian canola exports have declined significantly, creating a situation of increased production and stagnant sales. The primary reason is the lack of a market in China. China’s imposition of import guarantees and additional tariffs on related products has led to a sharp decline in Canadian canola exports to China this year. By September 2025, Canada’s total exports to China totaled only 2.33 million tonnes, a significant 42% decline compared to the same period last year. Although Canada increased exports to other countries, this was not enough to offset the loss of the Chinese market. By September 2025, global Canadian canola exports for the year totaled 5.64 million tonnes, a 6.2% decrease from the previous year. This decline in Canadian canola exports has prevented the domestic market from absorbing the pressure of a record harvest, creating enormous pressure on farmers’ sales. Despite a slight increase in domestic rapeseed processing volumes by 1.1% year-on-year to 3.94 million tonnes, this is still not enough to alleviate the oversupply pressure that is also putting significant downward pressure on ICE rapeseed futures prices.

Imported canola stocks are depleted; attention shifts to canola supplies from Australia

In China’s domestic market, imported canola stocks have been depleted. Due to a shift in import sources, future supplies will depend primarily on the new Australian canola harvest. Specifically, by early December 2025, imported canola stocks at coastal oilseed mills fell to zero. SteelHome data shows that stocks at major ports, including Fujian, Guangdong, Guangxi, Liaoning, and Jiangsu, remain zero. The immediate cause is the near-total halt of Canadian canola imports, resulting in zero processing volumes and zero canola oil/cake production at coastal mills. Domestic processors have entered a period of raw material shortages, completely shifting the market’s focus from inventory to the arrival of the new Australian canola harvest. Currently, Australian canola supplies remain driven by market sentiment, which anticipates an improved supply situation without the emergence of a large-scale, stable supply flow. This situation maintains a shortage of high-quality raw materials for processing in the domestic market, thereby supporting domestic canola prices. At the same time, it creates uncertainty regarding the timing and volume of future supply recovery. Consequently, the actual arrival schedule, shipment volumes, and subsequent processing operations of Australian canola have become key variables determining the potential for rebuilding domestic canola oil and cake stocks. Going forward, continued monitoring of vessel purchase volumes and port unloading activities is crucial.

Weak demand for canola meal and oil: persistent dual weakness in the demand and supply dynamics of canola

On the demand side, the current period marks a seasonal decline in canola meal consumption, demonstrating particularly sluggish dynamics. Demand for aquaculture feed and products has not yet shown significant improvement due to the lack of effective additional support. Trading activity in the market remains low, and overall transaction volumes are insufficient.

Rapeseed meal consumption is currently experiencing a seasonal decline, with particularly weak performance. Demand from aquaculture and feed processing has yet to significantly improve, lacking effective additional support. Trading activity remains low, and overall transaction volumes are insufficient. According to SteelHome, rapeseed meal purchases at coastal oil mills are only 0.01 million tonnes, reaching an all-time low. Despite extremely low rapeseed meal inventories at coastal oil mills, weak demand is not providing effective price support. At the same time, demand for rapeseed meal is experiencing competitive pressure from other meal products, such as soybean meal. Although soybean meal prices remain high, its economic viability is low, partially limiting the potential for a decline in rapeseed meal prices. Consequently, the rapeseed meal market exhibits the typical characteristics of both weak supply and weak demand. In the rapeseed oil market, demand also remains weak, although this is largely due to structural factors. Rapeseed oil purchases at coastal oil mills totaled 0.22 million tonnes, slightly lower than the previous month, with sparse spot trading and weak downstream purchasing. High inventories remain the main factor restraining demand. As of the week ending December 5, commercial rapeseed oil stocks in eastern China and coastal regions stood at 347,000 tonnes. Despite nine consecutive weeks of inventory drawdowns, absolute levels remain close to historical averages and exceed those for the same periods in 2020 and 2022. Furthermore, the price advantage of soybean oil significantly reduced rapeseed oil consumption. In contrast to the seasonal decline in demand for rapeseed meal, some expectations of replenishment for rapeseed oil remained. However, given the expected recovery in processing plant utilization rates and the readiness of rapeseed oil supplies to rise driven by the recovery, downstream buyers demonstrated weak actual purchasing interest and a strong wait-and-see attitude. Consequently, the recent sustained drawdown in rapeseed oil inventories has weakened its supportive effect on rapeseed oil futures prices. Market expectations have shifted toward a restocking of rapeseed oil. At the same time, constrained by soybean oil substitution, the potential for a recovery in rapeseed oil futures prices remains limited. Overall, the rapeseed meal and rapeseed oil market is caught between the immediate pressure of weak supply and demand and the expectation of a future recovery in the supply and demand balance.

Tags: China, Canada, rapeseed, rapeseed oil, rapeseed meal