Canola Spread Across Atlantic

Global canola markets are getting tighter. Not because the farmers couldn’t grow as much or weather was abnormally disruptive but because the shipping lanes from Ukrainian ports are nearly closed.

While the crush volumes are on the rise in Canada and European Union, the Chinese demand for Canadian canola has also seen a surge, since duty was scaled down.

The Black Sea situation is only getting worse and Ukraine will have to depend on road and rail to move most of its 2026 produce and in that, it will face resistance at its Western borders from the Polish and Romanian farmers.

Spread between ICE canola and Euronext rapeseed tells about the state of balance sheet on two sides of Atlantic and this season, the spread is in a broad range since the start of the year.

The spread can turn volatile in the coming days owing to multiple factors:

• ·        Currency
• ·        Chinese demand pulling Canadian canola
• ·        Canadian crushers pushing up bids
• ·        Restricted access to sea ports for Ukrainian cargo
• ·        Shortage of imported rapeseed in European Union

Keep an eye on the spread, when the geopolitical risks to European supply get factored in, we will see a heightened volatility and activity therein.