After a year marked with volatility, trade disputes and continued erosion of faith in rules based trade, panelists at the Canadian Crops Conference, held in Toronto in March, explained challenges in the international trade order and what Canada can do to improve its standing.

How can Canada stand out in a globalized market?

“The rest of the world, the rest of the sectors of the global economy, are finally getting to know what it felt like to be agriculture for a number of years,” said Jeff Mahon, director of StrategyCorp.

He pointed to non-tariff barriers and the weaponization of trade.

Canada has sought to overcome challenges through diversification, but Mahon said this may not be as easy as some are making it out to be.

“This whole movement is driven by, you know, roughly 75 per cent of our exports going to the United States. But the last I checked, Canadian agriculture is already pretty diversified,” he said.

“Telling Canadian agriculture it needs to diversify further is like telling a cayenne pepper it needs to be spicy.”

The questions are — how Canada can grow its market share and how reliant Canada should be on bigger markets like China and India. Mahon said it will be important to recognize there may not be alternatives to those markets and Canada will likely need to continue trading in both.

Win-win thinking

In a global market currently favouring buyers, Mahon said Canada may need to find new strategies to stand out.

“In some cases, that might mean selling more processed or value-added goods,” He said. “In other cases, particularly when we’re looking at new markets in developing countries, we might want to think about bringing a bigger Canadian value proposition to them,” he said.

For example, instead of just offering commodities, Canaa can offer access to a network of capability and research.

This is already happening — for example, Prime Minister Mark Carney’s recent trip to India saw the promise of a Canada-India pulse research centre.

“Now you’re using empathy,” Mahon said. “You’re going to a developing country, India, and you’re saying, ‘what do you need from us?’”

In a country like India, where nutritional security is a concern, Mahon said this type of win-win-thinking could be part of Canada’s strength as a partner.

He added that he’d heard a former Indonesian ambassador suggest Canada could help countries build processing capacity, leading to “mandatory supply chains” with Canadian exports at the centre.

Mahon said he would like to see governments rephrase requests to industry to diversify and rather ask what the industry needs to grow market share.

“Diversification and growing exports isn’t going to work unless Canada fixes some of the supply side problems,” he said.

These may not be entirely an industry issue.

“The government might want to look in the mirror a little bit more if it wants to be able to figure out how to help grow agricultural exports.”

Barriers within international trade

One barrier for Canadian agri-food trade in the EU has been the challenge of adapting to regulatory frameworks. The effects of European policies, like the Green Deal, Farm to Fork strategy, can sometimes be felt in Canada.

For example, The European Commission has proposed a bill that would effectively set pesticide tolerances at zero on imported grains, oilseeds, pulses and other agricultural commodities if those pesticides haven’t been approved for use in the EU.

The EU isn’t a primary destination for Canadian grain, oilseeds and pulses, but exports can be significant some years.

European politicians have argued that this levels the playing field so growers outside of Europe don’t have a competative advantage.

The Canadian government is lobbying for predictability said Greg MacDonald, a counsellor with the Mission of Canada to the EU.

Prime Minister Mark Carney is seen as a close friend in many countries, and now the government is attempting to leverage that, MacDonald said.

People shouldn’t think the EU is “closed for business on agriculture trade,” he added.

MacDonald suggested Canada could continue to work with the EU on regulatory alignment.

“How do we make the regulatory frameworks work for Canada with the broad political overview we have that we’re the trusted and reliable partner, and the EU calls us and asks, how can Canada provide product X?”

A loss of faith in rules-based trade

The past year has also seen attacks on the role of rules-based trade.

Edwini Kessie, director of the agriculture and commodities division at the World Trade Organization (WTO) said he felt the core principles of his organization are “under attack.”

He said the non-discrimination principle and the security and predictability of market access have come into question for some.

“These have been the binding core principles of the WTO, but I think increasingly there are questions as to the effectiveness of the WTO rules in creating a level playing field,” Kessie said.

“We see in the EU specifically, regulatory and policy developments that may be shifting away from some core tenants of WTO rules, which adds to uncertainty in the grains and oilseeds trade,” MacDonald said.

Kessie said the solution is not for the global trade system to turn its back on the existing rules and encouraged stakeholders not to give up on the WTO.

“There are changes which have to be made,” he said. “And I do hope that the WTO members will come together and effect the real changes, which will strengthen the rules-based multilateral trading system.”

“The current prosperity that we are witnessing the world is because of the rules-based system,” he said, “so we need to strengthen it.”

WTO ministerial talks in Yaounde, Camaroon at the end of March struggled to make headway on questions of reform and ultimately broke down after the group could not agree on renewing a moratorium on duties for electronic transmissions like digital streaming.

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The U.S. Environmental Protection Agency has announced its final Renewable Volume Obligation (RVO) blending rule for biomass-based diesel.

The EPA set the blending mandate for biodiesel and renewable diesel to 5.4 billion gallons in 2026 and 5.5 billion gallons in 2027.

That is a 61 to 64 per cent increase over the 2025 level of 3.35 billion gallons.

“We’re very pleased to see those updates, and Canadian canola can make a meaningful contribution there,” said Canola Council of Canada president Chris Davison.

WHY IT MATTERS: The U.S. is the biggest buyer of Canadian canola oil.

He has not yet seen the EPA’s official regulatory text, but based on the agency’s announcement, there does not appear to be anything preventing Canadian canola oil from helping to meet the feedstock demand for the new RVOs.

“Canola is a modest but important feedstock in U.S. biomass-based diesel production,” said Davis.

The new RVOs should create an “appreciable opportunity” for Canada’s canola crushers who have greatly increased production capacity in recent years.

U.S. oilseed groups were thrilled with the EPA’s announcement.

The American Soybean Association said soybean farmers needed a win to boost domestic markets, and U.S. president Donald Trump’s administration delivered “in a big way.”

“The 2026-27 RVOs will increase soybean oil use, boost U.S. soybean processing and grow domestic biofuel markets for our crop,” ASA president Scott Metzger stated in a press release.

The final rule also reallocates 70 per cent of retroactive small refinery exemption volumes dating back to 2016 back into the blending pool to support additional biofuel production and soybean demand.

The only letdown for U.S. soybean growers was that they did not get their wish for the rule to prioritize domestically sourced biofuel feedstocks in 2026 and 2027.

EPA to reduce credits for imported biofuel, feedstocks

However, the EPA announced that it will reduce credit generation for imported biofuels and biofuel feedstocks by half, beginning in 2028.

If the EPA lives up to that promise, it would serve as a significant additional economic driver for the U.S. soybean sector, according to the association.

Davison is not sure what the EPA means by imported biofuel and feedstocks. At one point, the agency was considering a proposal to create a ring fence covering all of North America, and anything outside that zone would be considered imported.

He needs to see the details of the regulation to figure out what the EPA is considering for 2028.

The U.S. biofuel industry accounts for more than half of all U.S. domestic soybean oil consumption.

Clean Fuels Alliance America noted that biodiesel and renewable diesel facilities were forced to shut down or run far below previous year levels in 2025 due to market uncertainty.

U.S. biodiesel production declined by one-third compared to 2024 levels.

“The robust biomass-based diesel volumes set in this rule support America’s farmers and consumers,” Kurt Kovarik, Clean Fuel’s vice-president of federal affairs, stated in a press release.

Demand from the biodiesel and renewable diesel sector accounts for 10 per cent of the value of every bushel of U.S. grown soybeans.

The National Oilseed Processors Association called it a “landmark rule” that provides certainty and confidence for American farmers and processors.

“The historic volumes for biomass-based diesel, the 70 per cent reallocation of waived gallons, and the commitment to account for SREs (small refinery exemptions) on a go-forward basis, restores program integrity and puts the RFS (renewable fuel standard) back on a growth trajectory,” association president Devin Mogler said in a press release.

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While the U.S. soybean crush continued to expand, StatCan didn’t include any soybean crush data for 2025 due to confidentiality requirements under the Statistics Act.

Canola

Canadian canola crushers took in more than 11.55 million tonnes of the oilseed last year, compared to the five-year average of 10.16 million. In the U.S., which has a far smaller canola crop to work with, its crush came to 2.02 million tonnes, a little more than the average of 1.98 million.

Soybeans

At more than 60 million tonnes, the U.S. soybean crush continued to expand with it far exceeding its five-year averages for seed, oil and meal. For the Canadian crush, it was receding from recent highs in 2022.

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The March contract gained C$8.90 per tonne during the week ended Feb. 4 at C$659.10. During the Feb. 4 session, it reached a high of C$660, which was the highest price seen for the contract since Dec. 2, 2025. On the same day, United States President Donald Trump announced that China committed to purchase 20 million tonnes of soybeans this marketing year, supporting vegetable oil prices.

Tony Tryhuk, director of futures trading with RBC Dominion Securities in Winnipeg, said China’s agreement to reduce and eliminate tariffs on Canadian canola was already factored into prices despite the agreement not coming into effect until March 1.

“No doubt the lifting the trade restrictions (by) China had a very positive effect on values,” Tryhuk explained. “Even on a day like (Feb. 4), there was positive news coming out of the U.S.”

The move above C$650/tonne in the March contract was also supportive from a chart standpoint.

“There was some pretty good resistance around that C$650 area. We managed to break above that,” he added. “Anybody who was short, thinking those highs were going to remain in place because of the very burdensome carryout we’re still projecting this year, those people are now in a position to buy back those positions and cover them.”

March soybeans gained 17.25 cents per bushel at US$10.9225 during the week, while March soyoil rose 1.35 cents per pound at 55.66. Tryhuk said it was “baffling” to see the Chicago soy complex move higher despite the upcoming record South American soybean harvest.

“It’s counterintuitive to see our market being as strong as we are,” he said. “You can look to the energy market. Biodiesel offered potential there, being a driver. Crude oil was trading at US$58 (per barrel) and it’s now at US$65.”

As traders start to roll their March positions into May, Tryhuk thinks the next resistance level for March canola will be C$675/tonne.

“(There was) pretty good resistance there back in early November. It looks to me a target price if the U.S. market can continue to be supportive to canola values.

“We need that updraft in order to get that market higher because by the time this deal is signed with China, it’s very late in the marketing year. If they don’t reach a two million-tonne export projection … our carryout will still be substantial, in the four million-tonne range,” he said.

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Chris Davison, president of the Canola Council of Canada, hasn’t had a chance to do a deep dive into the proposed regulation, but he likes what he has seen on the surface.

“On first blush, there are a number of provisions that can certainly help support Canadian canola’s access to the U.S. biofuel market,” he said.

It took one year for the U.S. Department of the Treasury and the Internal Revenue Service to clarify how the credit will work.

The credit has been available since January 2025, but producers and farmers have struggled to capitalize on it because there was minimal guidance to accompany the credit.

The newly published guidance helps biofuel producers determine their eligibility for and to calculate the credit made available under the One, Big, Beautiful Bill.

WHY IT MATTERS: The U.S. biofuel sector could be a huge customer for Canadian canola oil.

Davison is pleased to see that the credit limits feedstocks to those grown or produced in the U.S., Mexico and Canada.

“That’s a critical provision in terms of helping ensure that the economic benefits of biofuel accrue back to farmers domestically from the (Canada-U.S.-Mexico Agreement) countries,” he said.

It means biofuel made from used cooking oil and tallow from overseas markets does not qualify for the credit.

Canada’s canola industry is advocating for similar measures to be included in Canada’s Clean Fuel Regulations amendments.

The updated 45Z guidance also confirms that fuel made from Canadian canola is an approved pathway and that the indirect land use change penalties associated with agricultural feedstocks have been removed.

Biofuel is a policy-driven market, and there is one big remaining piece of that puzzle, which is when the U.S. Environmental Protection Agency establishes its Renewable Volume Obligations (RVOs) for 2026 and 2027.

The EPA has floated a proposal that imported biofuel and biofuel made with imported feedstock would be assigned half as many Renewable Identification Number (RIN) credits as fuel made with domestic feedstocks.

That idea has been embraced by groups such as the American Soybean Association but strongly opposed by Canada’s canola sector.

The EPA recently said it expects to issue its final RVO rule during the first quarter of 2026.

Davison said the 45Z credit and the RVO ruling will strongly influence Canada’s canola oil sales to the U.S. market.

He is pleased to see that the first domino appears to have fallen in the right direction.

“This is a positive development and we should recognize that,” he said.

“It recognizes that Canadian canola is an important feedstock for biofuel producers in the U.S. as well as Canada.”

Crux, a capital markets platform for the clean economy, estimates that US$1 billion in 45Z credits were transacted in 2025.

It anticipates the new guidance will unlock an additional $1 to $1.5 billion in credits by the end of the third quarter of 2026.

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At 176 million tonnes, Cordonnier’s estimate of the 2025/26 Brazil soybean harvest is between those of the United States Department of Agriculture at 175 million and the 177 million from Conab, its Brazilian counterpart. Regardless of the estimate, Brazil appears to be on its way to its largest soybean crop on record.

Why it matters: South American and U.S. soybean and corn crops greatly influence North American prices

Cordonnier said rainfall throughout Brazil was variable, depending on the region during October and November.

“Since December, it’s gotten much more regular,” he added. “The farmers who had irregular rainfall are now much more positive and confident that the soybeans will do good.”

He noted that east-central Brazil is to be become drier than the rest of the country. He said the La Nina that could impact the weather across South America could bring above normal rainfall for central Brazil and below normal precipitation for southern Brazil.

Safrinha corn dispute

As for Brazilian corn, Cordonnier said there’s a dispute over the size of the safrinha crop, the country’s second harvest. He said that Conab was on the high end of forecasts with the safrinha corn area expanding by 3.8 per cent. Meanwhile, consultancy IMEA projected an increase of 1.3 per cent.

“I think Brazilian corn has sort of ‘yet-to-be-determined’ going forward,” Cordonnier said.

The USDA stuck with its estimate of 131 million tonnes of corn in total for Brazil for 2025/26 in its December report, down from 136 million the previous year. However, Conab swung the other way, projecting an increase to 138.3 million tonnes.

Argentina crops

For Argentina, Cordonnier said that country’s corn and soybean crops are 60 to 70 per cent planted.

“They’ve had better than expected weather and the crops are doing better than anticipated,” he said, noting that some part of Argentina have been drier than others.

More soybeans, less corn to be planted

In looking at what U.S. farmers could plant in 2026, Cordonnier predicted a shift of two million to four million acres to soybeans from corn, despite poor soybean exports to China and the massive South American crops.

“The soybean advantage over corn is that it’s cheaper to plant,” he said. “That’s going to be a big factor going forward.”

However, he said the weather will be a wildcard as estimates start to come.

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Lerner said he heard stories of some Prairie farmers saying conditions are drier now than in the spring, but he chalks that up to their very localized conditions.

The Prairies caught a break with sufficient rains from June to early August, he said.

“We backtracked the last couple of months, and the soil is very short,” Lerner added. “The bottom line is that we are very dry again, mostly in Palliser’s Triangle.”

Aside from some light precipitation, the prospects of rectifying the dryness and drought are very poor, he said. Even the La Niña that is taking hold of weather patterns won’t have much effect and the phenomenon is to peter out by the end of December.

Won’t be much help from La Niña

Lerner said a La Niña would most often generate above normal amounts of snow for an area that includes much of southern Alberta, as well as southwestern Saskatchewan and into central Montana. This time around that’s unlikely to happen, but that area will still get some build up of precipitation.

The meteorologist said drought conditions are likely to get worse for an area stretching across west-central Saskatchewan to east-central Alberta.

Added to that is the Peace country in Alberta, which Lerner noted is especially dry and has gone a full year without a lot of moisture.

“They’re hurting like Palliser’s Triangle is,” he said.

As for the U.S., Lerner pointed to “droughty” conditions for much of the Plains as the cold weather sets in.

“It’s difficult to get enough moisture during the cold season to change the moisture profile,” he said, but pointed to a bright side.

“There has been enough precipitation in the U.S. for winter wheat emergence and establishment. So this is not a crisis. It’s not as serious as it is in Canada,” Lerner explained.

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Just as the North American soybean industry was pinning its hopes on a new China-U.S. trade deal, as of Sept. 22 Argentina has temporarily eliminated its agricultural export tax until Oct. 31. Cordonnier said the tax had been 26 per cent.

“This was a complete surprise. No one saw this,” said Cordonnier. “Traders in Argentina are saying this a bomb that no one anticipated.”

“Milei needs dollars,” he said of Argentine President Javier Milei, whose government is looking for fresh revenues.

Cordonnier estimated Argentine farmers are currently holding 20 million tonnes of soybeans along with 12 million tonnes of corn.

“China now has a new source of cheap soybeans,” he added.

Presently, China continues to buy soybeans from Brazil “like crazy” he said, noting several trade participants believe China has enough already to get through to the end of December. Cordonnier said Brazil’s new crop is not due to become available until February, and China’s six million tonnes of reserves could be enough to get through December to February without needing to import from the U.S.

However, Cordonnier said if China is looking to strike a trade deal with the U.S., it would purchase some soybeans as a sign of good faith. So far in 2025/26, China has yet to openly make any U.S. soybean purchases.

“This is the first time in recent memory that China has not purchased any new crop U.S. soybeans,” the analyst said.

China is the world’s largest soybean importer, with the U.S. Department of Agriculture projecting that country’s total 2025/26 soybean purchases at 112 million tonnes.

Cordonnier pointed out that U.S. soybean growers have found themselves in a very serious situation with China not looking to buy from them. Trade relations between the two countries took a turn for the worse after the Trump administration imposed stiff tariffs on all imports from China.

“(U.S. farmers) have been petitioning the Trump administration, ‘you gotta do something here.’ Trump demanded China double, triple or quadruple their soybean purchases and they have not done a thing as for new soybean purchases,” Cordonnier explained.

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The clock is ticking down for countries around the world to conclude deals with the U.S. after President Donald Trump unleashed a global trade war that has roiled financial markets and sent policymakers scrambling to protect their economies.

Why it matters: The U.S. is Canada’s largest trading partner.

Bessent did not say which countries could get deals and what they might contain. Trump has kept much of the world guessing on the outcome of months of talks with countries hoping to avoid the hefty tariff hikes he has threatened.

“We’ve had a lot of people change their tune in terms of negotiations. So my mailbox was full last night with a lot of new offers, a lot of new proposals,” Bessent said in an interview with CNBC. “So it’s going to be a busy couple of days.”

Tariff letters to start going out

Trump said the U.S. would start delivering tariff letters from 12 p.m. ET (1600 GMT) on Monday, but Bessent said they would not necessarily contain ultimatums.

“It’s just ‘thank you for wanting to trade with the United States of America,’” he said. “‘We welcome you as a trading partner, and here’s the rate, unless you want to come back and try to negotiate’.”

For its part, the European Union still aims to reach a trade deal by July 9 after Commission President Ursula von der Leyen and Trump had a “good exchange”, a Commission spokesperson said.

It was not immediately clear, however, whether there had been a meaningful breakthrough in talks to stave off tariff hikes on the United States’ largest trading partner.

Adding to the pressure, Trump threatened to impose a 17 per cent tariff on EU food and agriculture exports, it emerged last week.

Trump had on Sunday said the U.S. was close to finalising several trade pacts and would notify other countries by July 9 of higher tariff rates. He said they would not take effect until August 1, a three-week reprieve.

He also put members of the developing nations’ BRICS group in his sights as its leaders met in Brazil, threatening an additional 10 per cent tariff on any BRICS countries aligning themselves with “anti-American” policies.

The BRICS group comprises Brazil, Russia, India and China and South Africa along with recent joiners Egypt, Ethiopia, Indonesia, Iran, and the United Arab Emirates.

Trump’s comments hit the South African rand.

EU seeks effective approach to Trump

More broadly, stocks drifted and the U.S. dollar held near multi-year lows after the U.S. flagged the tariff reprieve but failed to provide specifics.

The EU has been torn over whether to push for a quick and light trade deal or back its own economic clout in trying to negotiate a better outcome. It had already dropped hopes for a comprehensive trade agreement before the July deadline.

“We want to reach a deal with the U.S. We want to avoid tariffs,” the spokesperson told reporters at a daily briefing. “We want to achieve win-win outcomes, not lose-lose outcomes.”

Without a preliminary agreement, broad U.S. tariffs on most imports would rise from their current 10 per cent to the rates set out by Trump on April 2. In the EU’s case, that would be 20 per cent.

Von der Leyen also held talks with the leaders of Germany, France and Italy at the weekend, Germany said. Chancellor Friedrich Merz has repeatedly stressed the need for a quick deal to protect industries vulnerable to tariffs ranging from cars to pharmaceuticals.

The German spokesperson said the parties should allow themselves “another 24 or 48 hours to come to a decision”.

Germany’s Mercedes-Benz MBGn.DEsaid on Monday its second-quarter unit sales of cars and vans had fallen nine per cent, blaming tariffs.

Russia said BRICS was “a group of countries that share common approaches and a common world view on how to cooperate, based on their own interests”.

“And this cooperation within BRICS has never been and will never be directed against any third countries,” said Kremlin spokesman Dmitry Peskov.

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Despite canola markets being closed for Canada Day on July 1, the November canola contract sharply rose nearly C$20 per tonne to finish July 2 at $734.50, its highest level since June 23. Much of the boost came from the announcement of renewed negotiations between Canada and the U.S. on June 30 after a brief impasse.

David Derwin, a Winnipeg-based commodity futures advisor for Ventum Financial Corp., said trade discussions relate to new biofuel mandates in the U.S. and how much Canadian canola will be included.

“Once we knew there was going to be a larger volume (of renewable fuel blends) proposed, that’s helped oil futures, in general,” Derwin said. “If there’s (more) inclusion, that’s a positive and even if there’s not and soyoil is out of the picture for some uses, canola can fill some of those.”

Statistics Canada reduced its 2025-26 estimates for canola acres in its principal field crop report last week and Derwin added that tighter supplies are also underpinning gains. Dry weather in most parts of the Prairies has also been supportive.

“In some areas, the crops look really good; some have been terrible. We need a lot of rain,” he said.

Derwin added that the period between Canada Day and Independence Day in the U.S. often welcomes seasonal highs for canola, but the oilseed doesn’t seem to have reached its peak yet.

“For now, it’s pointing up, but these levels are providing really good opportunities for people,” he said.

Derwin also said weather can also affect prices, especially at this time of year, which could put an end to canola’s rally. However, setbacks in cross-border trade talks and canola’s inclusion in U.S. biofuel blends can also knock prices down.

“Those are the three factors pushing (prices) up and those are the three that can push them down too,” he said.

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