Canola Hits 4-Week High

Canola futures rose toward $740 per tonne, the highest since mid-March, tracking gains in soybean oil and higher oil prices amid lingering disruptions in the Strait of Hormuz and uncertainty around the Middle East peace deal. On the production side, Western Canada is slowly thawing and drying after a very late spring delayed canola seeding, but farmers say there is still time to plant without affecting production. Meanwhile, a USDA report released early this month indicated canola production in Australia is projected to fall to 6.2M tonnes in 2026/27, a 19% decline from the previous year’s near-record 7.68M tonnes, dampened by diesel and nitrogenous fertiliser supply constraints and price increases.

Canola futures rose past $720 per tonne as renewed skepticism regarding a Middle East ceasefire re-established the risk premium across the energy and oilseed complex. This upward move followed a surge in crude oil which strengthened the biofuel-driven demand floor and pulled Chicago soyoil and canola higher in tandem. While President Trump extended the deadline for strikes on Iranian energy infrastructure to April 6th to allow for negotiations, the potential deployment of 10,000 additional US ground troops has fueled fears of a prolonged conflict and further supply chain disruptions. Farmers face increasing pressure as global supplies of nitrogen-based fertilizers shrink and diesel overheads climb, threatening to offset the gains from higher crop prices. Despite a temporary gesture of goodwill where Iran allowed ten tankers to pass through the Strait of Hormuz, the waterway remains effectively closed, keeping energy-driven inflation risks at the forefront of the market.

Canola futures fell below $720 per tonne as the cooling of Middle Eastern tensions triggered a broad sell-off in the energy and oilseed complex. This downward correction was driven by a sharp drop in crude oil prices following negotiation hopes between the US and Iran, a development that significantly weakened the biofuel-driven demand floor and reduced the speculative risk premium previously embedded in the market. While the effective closure of the Strait of Hormuz and a 30% spike in fertilizer costs initially pressured margins and incentivized an additional 200,000-hectare shift in Canadian planting intentions, the five-day postponement of military strikes eased concerns over imminent supply chain disruptions and high diesel overheads. Furthermore, spillover weakness from wheat and softer soybean oil markets reinforced the bearish sentiment, as international refiners pivoted away from high-cost vegetable oils in response to stabilizing global stock expectations.