Canola prices have declined in recent months from record high levels of $1000 per ton, down to around $800 per ton, delivered XLD Powranna.
While the decline of $200 is significant- $800 is still a record high price for this time of the year.
The price decline can be contributed to: a recovery in palm oil production and the Indonesian Government removing export restrictions; a strong recovery in Canadian production after last year’s terrible drought and perceptions that demand for vegetable oils will be lower as a result of the global recession.
In recent weeks there have been a number of government announcements regarding the use of vegetable oils in biofuels, this is likely to significantly increase the use of canola oil (and other veg oils). Specifically in the US- Congress passed the Inflation Reduction Act, which gave further support and subsidies for the renewable biodiesel industry. New plant capacity under construction will significantly increase the demand for soybean oil in the US over the next 18 months. Indonesia announced that it was looking to increase its biodiesel mandate from 30% to 40%. If these policies (and other initiatives) become reality; demand for vegetable oil from the energy sector will increase at least 20% over 2023/24. This will be very supportive of canola prices medium to longer term.