Global abundant rapeseed production has led to a decline in the cost center, which weakens the support for domestic import costs. As the oil mill crushing start-up rate rises, the rapeseed oil stock in East China is facing the pressure of reconstruction. In the later period, the focus should be on the efficiency of Australian rapeseed customs clearance on the oil mill start-up rate.
Since late November, the domestic oil sector has shown a clear divergence in trends. The futures price of soybean oil has remained in a narrow range of fluctuations, the futures price of palm oil has stopped falling and rebounded, while the futures price of rapeseed oil has declined for three consecutive weeks from its high level, and its performance is significantly weaker than other oil varieties. This is closely related to the overall transformation of the rapeseed industry chain environment.
Canada's canola production hits record
At present, Canada's rapeseed production is revised up to a record level, but the market is structurally unbalanced due to serious export constraints and high inventories.
From the supply side, the significant increase in Canadian rapeseed production is a key factor. The latest report from Statistics Canada shows that the rapeseed production in Canada is expected to reach 21.8 million tons in 2025, a record high, which is a substantial upward adjustment compared to the 20.03 million tons estimated in September. This is mainly due to the ideal weather conditions in the later growing season in Alberta and Manitoba in the west, which has significantly increased the yield to a record 44.7 bushels per acre, exacerbating the loose global rapeseed supply pattern. From the demand side, as of late November 2025, the cumulative export volume of Canadian rapeseed was only 1.93 million tons, a sharp year-on-year decrease of 48%. Under the dual pressure of high production and poor exports, its domestic ending inventory is expected to climb to 2.5 million tons, far higher than the historical average, exerting continuous pressure on prices.
Domestic inventory reconstruction expectations are increasing
AUS rapeseed production also hit a new high, excluding Canada. AUS rapeseed production is expected to reach 7.2 million tons in the 2025/26 marketing year, a significant increase of 13% compared to the previous year, exceeding the 6.4 million tons of the previous year and setting a new historical record. The growth is mainly attributed to the abundant precipitation and mild temperatures in Western Australia, which have significantly increased the yield, contributing more than 60% of the increase in production; South Australia and Victoria have recovered from drought, with yields increasing by 63% and 17%, respectively. However, the southern part of New South Wales has experienced a decrease in yield due to insufficient spring rainfall, resulting in a 14% decrease in the state's production compared to the previous year.
As the world's third-largest rapeseed exporter, the significant increase in Australia's rapeseed production has enhanced its export potential this season. Although the EU has shifted to purchasing low - cost supplies from Ukraine and Moldova, resulting in Australia's exports to the EU reaching only 174,000 tons so far this year, a sharp year - on - year decrease of 68%, the growth in exports to China has become the core driver. Currently, Australian rapeseed with an 11 - month shipping schedule is arriving at Chinese ports in large numbers, filling the import supply gap. As of early December, the quotation of Australian rapeseed is approximately $50 per ton lower than that of Canadian rapeseed, attracting Asian buyers to switch to purchasing Australian rapeseed. As of early December, the duty - paid crushing gross profit of imported rapeseed has reached 703 RMB per ton, prompting Chinese oil mills to rely more on Australian supplies. This has provided an important strategic window for Australian rapeseed exports.
Import demand decline
In the 2025/26 marketing year, the EU's domestic rapeseed production increased, while imports fell significantly. Thanks to favorable weather during the growing season, the yield in France, Germany, and other regions exceeded expectations, and the total production is expected to reach 19.8 million tons, a year-on-year increase of 5.2%. However, so far this year, EU imports of rapeseed have only reached 1.58 million tons, a sharp decrease of 39% compared to the same period last year. Among them, Moldova's import volume increased by 193.5% year-on-year, jumping to the second largest supplier with 237,000 tons, but its weak transportation infrastructure limits its long-term growth potential; Canada's rapeseed imports reached 1.13 million tons, an increase of nearly ten times compared to the same period last year, surpassing Australia for the first time to become the EU's third largest source of supply. EU grain traders have signed long-term agreements with Canada for 1.6 million tons of rapeseed in 2026, locking in a unit price of $530/ton, but if the port of Odessa in Ukraine resumes operations, its cost advantage may reappear, potentially triggering large-scale default risks. At the same time, the EU's rapeseed planting area is expected to expand by 8% in 2026, which can replace about 3 million tons of import demand. Therefore, there is a possibility that the EU's import demand and cost for rapeseed will both decrease in the future. From the consumption end, the EU's rapeseed consumption in the biodiesel industry is expected to grow by 8% in 2025. However, household vegetable oil consumption has decreased, and retail sales have fallen by 3.7% year-on-year, with the substitution effect of sunflower seed oil being more significant.
The oil factory is expected to resume work soon.
Domestically, the structure of imported rapeseed has undergone a significant shift. Since China implemented a 75.8% margin policy on Canada, the ex-factory cost of Canadian rapeseed has surged to 4,560 RMB/ton, import volumes have dried up, coastal oil mills have cleared their rapeseed stocks, triggering a supply crisis. Due to the disruption of raw material supplies, imported oil mills have had zero crushing for 6 consecutive weeks, and the production of rapeseed oil and meal has stagnated, leading to a 11.3% decrease in the commercial rapeseed oil stockpiles in East China from 400,500 tons to 355,000 tons. Meanwhile, small oil mills in the inland areas have expanded against the trend due to the strong demand for fragrant rapeseed oil, with an operating rate of up to 85% in Sichuan and Yunnan, but their capacity only accounts for 15% of the national total, unable to reverse the overall tight supply pattern. Rapeseed oil consumption in small packaging in the fourth quarter grew by 8% driven by the seasonal demand for inventory, but the pick-up volume at imported oil mills declined, mainly due to the terminal's observation of the recovery of crushing after the arrival of Australian rapeseed.
At present, the estimated arrival volume of Australian rapeseed for the November shipping schedule is 5 million tons, about 500 RMB/ton lower than the price of domestically-grown rapeseed. Due to the impact of quarantine procedures, the actual customs clearance speed is slower, and the domestic crushing recovery is expected to be delayed until mid-December. If the efficiency of quarantine is improved later, the probability of oil mills resuming crushing may increase to 60%, and the supply of rapeseed oil at the end of December is expected to see a recovery growth, and the inventory is also expected to face the possibility of reconstruction. It is worth noting that Chinese enterprises have already locked in the purchase of 35 million tons of Australian rapeseed for 2026, but they still face uncertainties in the quality of Western Australian rapeseed and potential threats from market competition in India.
Overall, the global abundant rapeseed production has led to a downward shift in the cost center, weakening the support for domestic import costs. As the oil mill crushing start-up rate recovers, the rapeseed oil inventory in East China is facing the pressure of reconstruction. In the later stage, the focus should be on the efficiency of Australian rapeseed customs clearance on the oil mill start-up rate. With the expectation of improved supply and the expectation of inventory reconstruction, the performance of rapeseed oil futures is expected to be relatively weak in the vegetable oil sector.
If you have any inquiries or purchasing needs, please feel free to contact SunSirs with support@sunsirs.com.
