A delicate interplay impacting the global agricultural trade is unfolding, as the Canadian Prime Minister's trans-Pacific visit to China coincides with a domestic "destocking" phase in China's rapeseed oil market. As the world's largest rapeseed producer and exporter, Canada remains a key policy variable for China's market - one now deeply interwoven with China's destocking cycle. Together, these factors are set to influence the direction and volatility of rapeseed oil prices in the near term.
- Policy Variable: Potential Shift in Supply Expectations
China is the world's largest importer of rapeseed, while Canada is its largest exporter. The trade relationship between the two directly shapes the global flow of rapeseed products.
Since China initiated an anti-dumping investigation into Canadian rapeseed in September 2024, bilateral trade in rapeseed products has remained under pressure. In March 2025, China further imposed an additional 100% tariff on Canadian rapeseed and rapeseed meal; in August of the same year, a 78.5% anti-dumping deposit was levied on Canadian rapeseed, reducing trade volumes to low levels.
The Canadian Prime Minister's recent visit is seen as a crucial opportunity for both sides to seek a thaw in economic and trade relations. Statistics Canada reported that Canada's rapeseed production for 2025/26 reached a record high of 21.8 million tonnes, significantly revised upward by 1.77 million tonnes from the estimates in September 2025, marking a year-on-year increase of 13.3%.
If the talks yield progress, adjustments to trade restrictions on rapeseed products are possible, which could significantly impact the currently tight domestic rapeseed oil and meal markets, potentially leading to fluctuations in market sentiment and price expectations.
II. Inventory Reality: Tight Spot Supply of Rapeseed Oil
In contrast to the external policy variable is the "destocking" phase currently underway in the domestic rapeseed oil market. According to Mysteel's data, as of January 9, 2026, rapeseed oil inventories in key regions across China stood at 253,500 tonnes, down 44.99% year-on-year.
Customs data showed that rapeseed imports in November 2025 were 2,000 tonnes. Cumulative rapeseed imports from January to November 2025 totaled 2.4479 million tonnes, a decrease of 57.67% compared to the same period last year.
With Canadian rapeseed inventories depleted and Australian rapeseed yet to commence crushing, domestic rapeseed oil production has stagnated. Furthermore, overseas rapeseed oil offers have remained high, with futures prices mostly in backwardation, dampening traders' enthusiasm for vessel bookings.
Customs statistics also indicated that from June to November 2025, the prices of imported crude low-erucic acid rapeseed oil from Russia showed a steady upward trend. The average import price in June was Yuan 7,659 per tonne, rising to Yuan 8,125 per tonne by October. After including tariffs and fobbing fees, the estimated comprehensive import cost averaged around Yuan 9,600 per tonne.
Tight spot supply of rapeseed oil, combined with high procurement costs from earlier periods, has strengthened market sentiment to support prices.
III. Price Direction: A Dynamic Balancing Path Under Multi-Dimensional Game
As expectations for a "policy breakthrough" meet the reality of "inventory drawdown," the rapeseed oil market narrative will no longer be a simple one-sided story. Instead, it will enter a complex phase of multi-dimensional struggle, likely unfolding in the following stages.
Expectation-Driven Phase: In the short term, market focus may lean toward optimistic expectations of policy easing, potentially driving prices lower on sentiment. However, the persistent reality of tight spot supply due to destocking will likely create a floor, resulting in wide-range fluctuations between Yuan 8,700-9,100 per tonne. Price movements will be susceptible to news flow, with increased volatility.
Reality-Verification Phase: In the medium to long term, the market direction will depend on the race between "expectations" and "reality." Key insight include: 1) the actual pace and magnitude of policy easing, i.e., when new procurement can actually arrive; and 2) the actual efficiency of domestic destocking. If policy implementation is slow while demand accelerates destocking beyond expectations, price support will strengthen. Conversely, if import volumes surge rapidly, the market will face renewed pressure. The import cost of Canadian rapeseed will gradually become a critical pricing benchmark.
IV. Conclusion and Outlook
The rapeseed oil market is currently caught in an intense tug-of-war between the "reality of low inventories" and "expectations of policy change." The Canadian Prime Minister's visit has focused market attention on the direction of Sino-Canadian economic and trade policies, with related uncertainties exerting pressure on rapeseed oil futures.
However, persistently low domestic inventories, coupled with Australian rapeseed not yet being crushed, are contributing to overall tight spot supply.
With both bullish and bearish factors in play, short-term rapeseed oil futures prices are expected to consolidate within a range of Yuan 8,700-9,100 per tonne. Subsequent market focus will center on whether the Sino-Canadian talks yield substantive policy signals and the progress of Australian rapeseed crushing and vessel buying pace.
Written by Stacy Chen, chenyijuan@mysteel.com
