Canola futures extended their recent rally Monday, climbing to the highest level in nearly three years as strength in global vegetable oil and energy markets combined with mounting concerns about crop production.
The nearby November climbed to above $800/tonne in early trading, its highest level since September 2023 (see November futures chart below). Canola has gained about 8% during the past four weeks alone.
Much of the recent advance has been tied to sharply higher crude oil prices amid escalating hostilities involving the U.S. and Iran. Attacks affecting shipping through the Strait of Hormuz have raised concerns about global energy supplies, increasing the value of vegetable oils used in renewable fuels. Strength in Chicago soybean oil and European rapeseed has provided additional spillover support to the Canadian market.
Prairie production uncertainty has also helped underpin the canola market. Excessive rainfall and flooding across parts of Western Canada could result in an unusually large number of seeded acres being abandoned or producing below-average yields. Analysts have warned that output may fall below a year earlier, despite a record-large planted area.
Meanwhile, forecasts and now turning much hotter and drier for parts of the southern Prairie.
Canadian production concerns have been further compounded by excessive heat and dryness in Europe, which are threatening the region’s rapeseed crop.
November canola: source - Barchart
