Market sources told Expana that China is still planning to impose a 75.8% anti-dumping duty on Canadian canola seed from August 14, a move that industry sources say will make new sales to China virtually impossible. The announcement triggered a sharp sell-off in ICE canola futures and Matif rapeseed prices, with IJX25 dropping to its lowest level since April and briefly entering oversold territory, brokers and analysts reported. Several traders noted that the Canada-EU arbitrage opened rapidly, with European buyers shifting focus toward Canadian-origin seed driven by its relative ‘cheapness’ compared to domestic supply. 

In the absence of Chinese demand, participants said the EU is now the primary outlet for displaced Canadian canola, resulting in a glut of supply weighing on regional values and crush margins. Some crushers told Expana they are considering a move to alternative oilseeds such as sunflower, which currently offers more attractive margins. If this shift becomes widespread, several buyers noted it could further tighten rapeseed oil availability, even amid strong European crop performance. 

Conversely, contacts in China told Expana that local rapeseed oil prices have surged amid concerns about securing future supply. Although Australia is preparing to resume canola exports to China after a five-year absence, market participants cautioned that these volumes may be insufficient to meet China’s demand. Expana sources indicated at least 250,000 mt of Australian canola could move as a ‘trial’ shipment, with most traders viewing the arrangement as “virtually a done deal.” However, Chinese buyers are said to be actively seeking other origins, such as Ukraine, fuelling what several traders described as a “scramble for supply.” 

Despite the headline risk, several players and brokers expressed scepticism to Expana regarding the duration of China’s tariff measures. Many highlighted parallels with previous Chinese trade tactics, notably during electric vehicle tariff negotiations with the EU, where anti-dumping announcements were used as leverage and then quickly dropped. The prevailing sentiment among market players is that China may be using tariff threats as bargaining power ahead of scheduled negotiations with Canada in two weeks’ time. One analyst commented that, if Canadian seed is blocked for an extended period, prices would need to fall further, which they haven’t done thus far, to redirect surplus supply globally, potentially underpinning the transient nature of the policy as some believe.  

Market sources also suggested that the announcement, while causing immediate volatility, provided a short-term buying opportunity and is unlikely to materially alter supply and demand fundamentals in the medium term. For the EU, specific concern centres on the potential for significant changes in the rapeseed oil GM/non-GM supply-demand balance, particularly within food and feed markets. 

Additionally, Expana has learned that Canada’s agriculture and trade ministers met with representatives from the canola industry and farming groups on 13 August, highlighting the significance and uncertainty around ongoing developments. 

In summary, while China’s tariff announcement has intensified near-term volatility and market speculation, most participants have told Expana they are focused on the outcome of upcoming negotiations. The risk remains that either an extension or reversal of China’s anti-dumping duty could materially impact canola and rapeseed trade flows for the remainder of the season.