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U.S. soybean oil market affected by Canada and China spat

China is launching anti-dumping investigations into Canadian canola imports and a market analyst says the news has been weighing on U.S. soybean oil prices.

Randy Martinson with Martinson Ag Risk Management in Fargo, North Dakota tells Brownfield “now the expectation is that Canada is going to bring most of their canola oil into the U.S. instead of taking it into China. That’s impacting the soybean oil market and that will eventually impact the soybeans.”

But Martinson says on the flip side, the action could increase U.S. soybean exports, because China will need an oilseed product to replace what they typically get from Canada.

“China will increase their imports of Australian canola, but they’ll also likely increase soybean buys from the U.S.”

Martinson says several weeks ago, Canada placed tariffs on electric vehicle and aluminum imports from China and the country’s investigations on canola are retaliatory. He says it’s a similar situation to what happened to U.S. soybean prices during the Trump administration.

“The other part is that the vegetable oil market has been weak in China. That also leads to believing here’s a way to slow down imports without them saying they’re having an decline in demand in the country.”

He says about 50% of Canada’s canola crop is exported to China and halting imports will affect Canadian canola prices greatly and that will in turn, lower U.S. canola prices.