While Australian canola is not expected to face a direct impact from US tariffs – RaboResearch general manager Australia and New Zealand Stefan Vogel said, “given we don’t ship noteworthy volumes to the United States – there are, though, three indirect impacts which might be felt by our canola sector here”.

Mr Vogel said two of these results from China’s retaliatory tariffs on US soybeans and could be both positive and negative for Australia, while the third could result from US tariffs on Canadian imports and would be negative for Australian canola.

“Recent US tariffs on Chinese products resulted in retaliatory action by China which included a 15 per cent tariff on US soybeans – albeit still below the 25 per cent tariff China imposed on US soybeans during the last US-China trade war in 2018/19,” he said.

As a result of these new tariffs, Mr Vogel said US soybean exports to China are likely to decline, with Brazilian farmers expected to benefit from a diversion of Chinese demand to South American origins.

“China is also likely to increase its demand for soybean substitutes, like palm oil and canola, and, with this, might import more Canadian canola.”

The Rabobank analyst said Australian canola, on the other hand, is not imported into China for phytosanitary reasons, so won’t directly benefit. “But, if more Canadian canola does end up in China, this could reduce Canadian competition with Australia’s canola exports going into other markets, like the EU or Japan, and potentially be a positive for Australia.”

Mr Vogel said another potential impact of the Chinese tariffs is – similar to the previous trade war – US soybeans exports might end up being more aggressively priced into the EU market, with cheaper soybeans increasing US’s market share there, and seeing soybeans partially substitute canola demand in the EU. This could result in a slight curbing in EU demand for canola, with Australia feeling some negative impact.

“In addition,” he said, “the US’s announced – but paused – 25 per cent tariffs on Canadian products, including canola oil and meal, might result in a third indirect impact for Australian canola, which may also be slightly negative”.

Canada typically produces three to four times as much canola as Australia, processing almost two thirds of it into oil and meal. Of this, 95 per cent of the canola oil and 60 per cent of the meal is exported to the US.

Mr Vogel said once 25 per cent tariffs are applied, Canadian canola oil and meal exports to the US will likely decline, slowing the pace of Canadian canola processing and, with it, increasing the availability of unprocessed canola on the global export market.

“Some of those extra volumes of Canadian canola might be absorbed by China – to whom Canada shipped a record volume in 2024 – but some might also compete more aggressively with Australia into Japan, UAE and the EU,” he said.

“The US tariff situation can change rapidly so these three indirect impacts on Australian canola may not occur at the same time nor last for a long period.

“The upshot, though, is canola prices may well see volatility through the year,” he said.

Added to this, Mr Vogel said the outlook for the northern hemisphere canola crop in 2025 will become clearer in coming weeks. “For now, the EU’s canola crop is expected to recover by more than 10 per cent from the low 17.2 million tonne level seen in 2024, as key canola-producing countries – including Germany, France, Poland and Romania – are expected to see improved yields this harvest, if May and June weather allows. And this could slightly curb EU canola import demand.”

To find out more about RaboResearch, contact your local Rabobank branch on 1300 303 033 or subscribe to RaboResearch Food & Agribusiness Australia & New Zealand on your podcast app.

RaboResearch Disclaimer: Please refer to our Australian RaboResearch disclaimer here

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.