The global oilseed market is undergoing a period of transformation, influenced by a combination of strong production figures, evolving trade patterns and significant policy shifts.

In South America, RaboResearch senior analyst Vitor Pistoia said the soybean harvest is nearing completion, with Brazil, Argentina, Paraguay and Uruguay collectively expected to produce around 230 million tonnes. “This marks a substantial increase from the 217 million tonnes harvested in 2023,” Mr Pistoia said. “The abundance of soybeans is exerting downward pressure on global oilseed prices, particularly in the soybean meal segment, effectively acting as a price anchor.”

Meanwhile, in the northern hemisphere, the Rabobank analyst said the European Commission’s MARS (Monitoring Agricultural ResourceS) May bulletin suggests Europe is on track for a solid oilseed harvest. “Canola yields are projected at 3.17 tonnes per hectare, a marginal 0.3% above the five-year average, while sunflower yields are forecast at 2.09 tonnes per hectare, 3.5% higher than recent averages,” he said. “Based on current planting areas, these yields would result in nearly 19 million tonnes of canola and 9.5 million tonnes of sunflower. This level of production is expected to ease supply constraints in the region and limit any significant upward movement in canola prices.”

Mr Pistoia said in North America, Canadian farmers appear resolute in their commitment to canola, with Agriculture and Agri-Food Canada’s May report maintaining a forecast of 8.76 million hectares for the third consecutive month. “This steadfastness comes despite ongoing trade tensions, including tariffs from the United States and China on Canadian canola, oil and meal,” he said. “Assuming average yields, Canada could produce approximately 18 million tonnes of canola this season. While the tariffs have had limited impact on seeding decisions, they have significantly affected Canada’s domestic crushing industry.” Mr Pistoia said crushing volumes are expected to decline from 8.5 million tonnes to 6.0 million tonnes year-over-year, which could lead to a larger volume of canola seed available for export. Additionally, he said, carryover stocks are projected to rise from 1.3 million to 2.0 million tonnes, further influencing global supply dynamics.

“South of the border,” Mr Pistoia said, “recent changes in the US biofuel policy have introduced new opportunities for Canadian canola”. On May 14, the US government updated its 45Z tax credit framework to include Canadian canola, following a revision of its carbon intensity score from 54.9 to 38.5 grams of CO₂ per megajoule, and by labelling it as “domestic” production. Mr Pistoia said the proposal needs to be confirmed, but this potential change, driven by the removal of the indirect land use change penalty, would make Canadian canola eligible for tax credits of US D 0.05 per litre for biodiesel, USD 0.058 for renewable diesel and USD 0.103 for sustainable aviation fuel. “Although canola still ranks below other feedstocks – such as tallow and used cooking oil – in terms of credit value, the inclusion is a positive development for Canadian growers, and potentially for Australian producers as well,” he said. “By reinforcing the US as a key export destination, Canada may reduce its competitive presence in the European canola market, thereby reshaping trade flows and market dynamics in the months ahead.”

For Australian canola growers, Mr Pistoia said, global market shifts offer a potential silver lining. “While record South American soy and stable European crops may cap a price bull run, Canada’s canola eligibility in the US biofuel market could ease competition in Europe.”

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