ICE canola drops sharply as trade war begins

By Phil Franz-Warkentin

Glacier FarmMedia | MarketsFarm — The ICE Futures canola market was sharply lower at midday Tuesday, as oilseed markets reacted to the developing trade war triggered by U.S. import tariffs and resulting retaliation.

The U.S. is a major destination for Canadian canola oil, with that business now facing 25 per cent tariffs. Broad weakness in the U.S. soy complex, as China announced its own countermeasures targeting U.S. agriculture, contributed to the weakness in canola.

European rapeseed and Malaysian palm oil futures were also lower on the day.

Chart-based selling was a feature, with some stops hit on the way down as speculators cover some of their large net long position.

Tightening supply projections and the need to ration demand remained somewhat supportive.

An estimated 49,800 canola contracts traded as of 10:45 CST.

Prices in Canadian dollars per metric tonne at 10:45 CST:

Canola            May   619.40    dn  26.50

Jul   627.90    dn  26.00

Nov   617.90    dn  21.00

Jan   625.60    dn  20.20