Market Morsel: Trump already impacting canola.

Market Morsel

The industry will be talking about Trump a lot over the next four years, as his policies will greatly impact what happens throughout all markets.

He isn’t in the Whitehouse yet but he is already making waves.

Trump has stated that there will be a 25% tariff on goods from both Canada and Mexico. He has said this will stay in place until they crack down on illegal immigrants and drugs flowing across the border.

So how does this affect us, as Australian farmers? Well, it is with canola. The US is a very big market for Canadian canola oil, and a 25% tariff will likely make them uncompetitive in the United States.

Canada sends a huge volume of oil into the USA, on average over the past decade, they have sent 65% over their volume to the USA, but last year they hit a peak of 91%.

The effect has been felt as traders panicked on the potential impact to canola/rapeseed. If this tariff is announced, Canadian canola, whether oil or seed, will have to find new markets to compete with Australian supplies.

Australia could send oil to the USA, and that could be helpful for our local crush industry, but we have a relatively limited volume of oil available to export. There has been recent expansions in crush capacity and new planned facilities, but it will take time to have volumes that will make a difference enough to flow back to grower returns.

Let’s keep a very close eye on this one.