Glacier FarmMedia | MarketsFarm — Canola futures on the Intercontinental Exchange stayed rangebound between C$620 and C$645 per tonne during the week ended Jan. 29, but the potential for tariffs has the trade on edge.
White House Press Secretary Karolina Leavitt reiterated on Jan. 28 United States President Donald Trump’s plans to place 25 per cent tariffs on U.S. imports from Canada and Mexico starting Feb. 1, putting speculation closer to reality.
Jamie Wilton of RJ O’Brien in Winnipeg said he doesn’t know for sure if Trump’s plans will involve 25 per cent tariffs. Wilton also said the trade hasn’t yet factored in the possibility in canola prices. But if they come to fruition, there would be a heavy detrimental effect.
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“Ninety per cent of our canola oil goes south (into the U.S.),” he added. “Everybody is just waiting to see what happens.”
However, Wilton added the trade isn’t showing any optimism that tariffs won’t be imposed.
“I’d say we’d be much higher on the futures prices if that was the case,” he said.
Ironically, tariffs could make canola look more attractive to global markets as lower prices would make the oilseed more competitive against others.
“China’s probably taken more than expected this year. So countries are there waiting and buying, slowly picking away. No one’s really too anxious to pay up with everything that’s going on,” Wilton said.
However, lower prices would also make canola less attractive to growers while determining which crops to grow before seeding starts this spring.
“The prices have to go higher to encourage planting,” Wilton explained.
But at the moment, it is unknown whether or not tariffs will be imposed on Canadian goods or not, and if so, how large they will they be. One media report said incoming Treasury Secretary Scott Bessent favoured a global tariff of 2.5 per cent to be increased over time. However, Trump said on Jan. 27 he and Bessent would not support that plan.
“It’s like putting a chip on red or black,” Wilton said. “You tell me if he’s got Trump’s ear or not. I don’t know. We’ll have to see.”
