Geopolitics and biofuel policy have been the latest ‘needle movers’ in the canola market, despite a largely unchanged outlook for the EU harvest, which remains forecast at slightly above 19 million tonnes.

RaboResearch senior analyst Vitor Pistoia said the mid-June crude oil spike pulled canola prices higher. “Month-over-month (MOM) MATIF canola spot prices rose 1.6% to AUD 849/tonne, after peaking at AUD 903/tonne prior to the US’s strike on Iran’s nuclear facilities,” he said. “The Feb/26 MATIF canola seed contract – a reference for Australia’s 2025 harvest – climbed by 3.6% to AUD 880/tonne, after reaching AUD 918/tonne.”

Beyond crude oil, Mr Pistoia said, another structural support for the global oilseed industry came from the United States, following May’s inclusion of Canadian canola into the US’s 45Z tax credit framework. “This saw the biomass-based biodiesel proposition for 2026 and 2027 surprising to the upside, triggering a rally in soybean oil and supporting Canadian canola. The Jan/26 CBOT soybean oil contract jumped 9.5% MOM to AUD 1,791/tonne, while ICE Jan/26 canola held steady at AUD 786/tonne,” he said.

Mr Pistoia said the surge in the US biofuel demand tends to favour imports of Canadian canola oil, assuming tariffs are not in place between Washington and Ottawa. “Theoretically, this would be a tailwind for Australian canola exports, as Canadian crushers are expected to ramp up production in response to the extra demand coming from south of the border, which would reduce the exportable surplus that competes with Australian canola seed,” he said. “However, the growing enthusiasm for vegetable oil raises a critical question: what will be done with all the soybean and canola meal produced?. There is no easy answer, and prices have taken a hit. CBOT spot soybean meal dropped 10.3% to AUD 374/tonne.”

Shifting to a shorter-term view, the Rabobank analyst said, the status of the Canadian canola crop is not ideal. “Soil moisture levels are low in the eastern parts of Canada, and the rainfall outlook points to a small chance of below-average rainfall in the western regions through August,” Mr Pistoia said. Forecasts generally range between 18 million to 19 million tonnes for this year’s Canadian canola crop, and any supply reduction would be a tailwind for prices.

Among other factors to watch, Mr Pistoia said is the 2025 sunflower crop in Europe and Russia. “The northern hemisphere sunflower crop is entering the second half of its cycle, and global production is poised to expand 10% year over year, chiefly in the Black Sea and Europe. If achieved, this surge in production would translate into additional sunflower oil supply and limit the upside potential for canola prices.”

Mr Pistoia said added to this, there is the potential impact of changes in EU duties on Ukraine imports. “As of early June, Ukraine’s duty-free access to the EU market for a number of agricultural goods – including oilseeds – expired, and tariff-rate quotas have been reinstated. This means imports of Ukrainian oilseeds are now subject to tariffs. The duty-free concession was part of the EU’s broader strategy to manage the economic fallout of the war, and it is expected to be a key topic in upcoming negotiations of EU support to Ukraine,” he said.

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Rabobank Australia & New Zealand Group is a part of the international Rabobank Group, the world’s leading specialist in food and agribusiness banking. Rabobank has more than 125 years’ experience providing customised banking and finance solutions to businesses involved in all aspects of food and agribusiness. Rabobank is structured as a cooperative and operates in 38 countries, servicing the needs of more than nine million clients worldwide through a network of more than 1000 offices and branches. Rabobank Australia & New Zealand Group is one of Australasia’s leading agricultural lenders and a significant provider of business and corporate banking and financial services to the region’s food and agribusiness sector. The bank has 87 branches throughout Australia and New Zealand.