Last week, we covered the United States Department of Agriculture (USDA) World Agricultural Supply and Demand Estimates (WASDE) report numbers on wheat and corn. Canola is a major crop here, and this week it’s time to look at forecast oilseed production for 2025-26.
The rise and rise of canola as a major rotation crop seems to have peaked. Over the last twenty years, global canola production has doubled, but the growth has run out of steam, while demand remains strong.
Figure 1 shows global canola and rapeseed production, with the USDA’s forecast for 2025-26. After a year of lower volumes, canola production is forecast to bounce back, increasing 5% to 89.55 mmt, just shy of the record set in 2022-23.
In 2024-25, canola consumption outstripped production for the first time in five years, leading to lower stocks and stock-to-use ratios. The USDA is forecasting a small 2% increase in consumption and a very small increase in stocks. Thus, despite a stronger production year, the supply and demand equation is to remain finely balanced.
Stronger canola production should lead to lower prices, which brings stronger consumption. The canola market is taking closer note of seasonal conditions than global forecasts and has rallied since the report was released.
The canola market is closely linked to soybeans, which make up 61% of global oilseed production. Canola accounts for 13% of all oilseeds. As such, canola prices tend to follow soybean values.
Figure 2 shows the global supply and demand for soybeans. Soybean production has also doubled in the last 20 years, with a record crop expected to be produced in 2025-26. This follows a record crop last year, but the world’s appetite for soybeans continues to grow.
Soybean stocks are expected to remain strong, keeping soybean prices bouncing along the bottom of the five-year range.
What does it mean?
The problem with canola and rapeseed prices moving to a premium to soybeans is that a level of support is taken away. When soybean prices are close to canola, we know that the downside will be limited. When a premium opens up, it leaves canola prices liable for a decline if supply expectations improve.
Key Points
- Global canola production is expected to increase in 2025-26.
- Soybean production is forecast to hit a new record, with consumption also increasing.
- Canola prices remain strong, with plenty of uncertainty surrounding crops in major exporting countries.
Click on figure to expand
Click on figure to expand
Data sources: USDA, Mecardo
