Lang
Since December, canola futures on the Intercontinental Exchange (ICE) have faced sustained downward pressure. Domestically, canola meal and canola oil futures have come under similar strain. Although both have staged a partial recovery after a prolonged decline, the broader rebound is showing clear signs of weakness.
Upward revisions to global canola production forecasts have added to supply-side pressure. Canada's canola industry is currently grappling with a structural dilemma best described as bumper crops amid sluggish sales. The core contradiction lies in the sharp gap between record production volumes and extremely weak export demand. The latest report from Statistics Canada confirms that the 2025/26 canola harvest will total 21.8 million tonnes. This not only sets a new all-time record but also significantly exceeds the market's previous forecast of 21.25 million tonnes. Compared with September estimates, this marks a substantial increase of 1.77 million tonnes, or a rise of 2.56 million tonnes year on year, an increase of 13.3%.
At the same time, the US Department of Agriculture's December supply-and-demand report also raised its forecast for Canadian canola production in 2025/26 to 22 million tonnes, reinforcing expectations of a Canadian canola surplus. The unexpectedly strong rise in Canadian output is primarily attributed to favourable weather conditions and expanded planting areas. This has fundamentally altered the country's canola supply-and-demand balance, placing significant downward pressure on ICE canola prices.
Upward revisions to production forecasts in Russia and Australia have reinforced the picture of a global canola surplus. In its December report, the USDA raised its forecast for global canola production in 2025/26 by 3 million tonnes to 95.273 million tonnes. This included a 500,000-tonne increase in Russian output to 6 million tonnes, up 29% year on year, and a 500,000-tonne increase in Australian output to 7.2 million tonnes, up 12.5% year on year. The combined production increases from these two major producers, together with Canada's record crop, have swelled global canola supplies.
Weak Canadian canola exports: the missing Chinese market
Despite the robust supply outlook, Canadian canola exports have fallen sharply, creating a situation marked by rising production alongside stagnant sales. The main cause is the absence of the Chinese market. China's imposition of import safeguards 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 stood at just 2.33 million tonnes, a significant 42% drop compared with the same period last year. Although Canada increased shipments to other destinations, this was not enough to offset the loss of the Chinese market. By September 2025, Canada's total global canola exports for the year stood at 5.64 million tonnes, down 6.2% year on year. Although domestic crushing volumes rose slightly by 1.1% year on year to 3.94 million tonnes, this remains insufficient to ease the pressure of the growing surplus.
Imported canola stocks run dry; market eyes Australian supplies
In China's domestic market, imported canola stocks have been depleted. With import sourcing shifting, future supplies will depend largely on the new Australian canola harvest. By early December 2025, imported canola inventories at coastal crushing plants had fallen to zero. Data from SteelHome shows that stocks at major ports, including Fujian, Guangdong, Guangxi, Liaoning and Jiangsu, remain at zero. The direct cause is the near-total halt in Canadian canola imports, which has left coastal crushers with no processing volumes and no canola oil or meal output.
Domestic processing plants have entered a period of raw material shortages, shifting market focus entirely from existing stocks to the arrival of the new Australian harvest. Australian canola supply remains driven by market sentiment anticipating an improvement in the supply situation, though a large-scale, stable flow of supply has yet to materialise. This continues to keep high-quality processing raw materials in short supply on the domestic market, supporting domestic canola prices, while creating uncertainty over the timing and scale of any future supply recovery.
Weak demand for canola meal and oil
On the demand side, the current period represents a seasonal decline in canola meal consumption. Demand from feed and aquaculture sectors has yet to show any notable improvement. Trading activity in the market remains subdued, and overall transaction volumes are insufficient.
According to SteelHome data, rapeseed meal purchases at coastal crushing plants total just 10,000 tonnes, marking an all-time low. Although coastal crushers' rapeseed meal inventories are extremely low, weak demand is failing to provide effective price support. Demand for rapeseed meal also faces competitive pressure from other meal products such as soybean meal. Although soybean meal prices remain high, their economic viability is limited, which partly restrains the potential for rapeseed meal prices to fall further.
In the rapeseed oil market, demand also remains weak, though this is largely attributable to structural factors. Total rapeseed oil purchases at coastal crushing plants stood at 220,000 tonnes, slightly lower than the previous month, with scarce spot trading and weak buying from downstream processing industries. High inventories remain the key factor curbing demand. As of the week ending 5 December, commercial rapeseed oil inventories in eastern China and coastal regions stood at 347,000 tonnes. Despite nine consecutive weeks of drawdowns, absolute levels remain close to historical averages and exceed those recorded during the same periods in 2020 and 2022.
The price advantage of soybean oil has significantly reduced rapeseed oil consumption. Given the anticipated recovery in crushing plant operating rates and the resulting readiness of rapeseed oil supply to rise, downstream buyers have shown weak interest in actual purchasing, adopting a strong wait-and-see stance. As a result, the recent sustained drawdown in rapeseed oil inventories has weakened its supportive effect on oil futures prices.
Overall, the rapeseed meal and oil market finds itself caught between immediate pressure from weak supply and demand, and expectations of a future rebalancing in the supply-and-demand equation.