Canadian canola might be the crop with the most to lose from U.S. President Donald Trump’s sweeping reciprocal tariffs due Wednesday that are set to shake up demand.
The tiny oilseed, which grows from a small plant with bright yellow flowers and gets its name from a combination of the words “Canada” and “ola,” for oil, is already facing tariffs from China while U.S. levies are looming.
Together, the top two importers brought in canola products worth $12.6 billion (US$8.8 billion) in 2024, according to the Canola Council of Canada.
“The situation we are facing now is pretty unique,” said Chris Davison, president of the council. “This is the first time we’re facing a tariff-driven situation with our two largest markets at the same time.”
Further clouding demand is burgeoning anti-seed oil sentiment, with newly confirmed U.S. Health and Human Services Secretary Robert F. Kennedy Jr. promoting beef tallow as a healthier alternative to oils made from crushing seeds such as canola and soybeans.
The demand uncertainty is coming just before the spring planting season. While many growers have already bought the seed they expect to plant, there’s still time to switch to crops such as wheat, soybeans, corn or lentils, according to Lawrence Klusa, president of Winnipeg-based advisory firm Seges Markets.
Canada could potentially ship corn to Mexico if the Latin American country seeks to retaliate against the U.S., its top corn supplier, Klusa said.
Canola futures climbed Tuesday in New York, lifted in part on expectations of better demand in the U.S. for biofuels — and speculation that Trump may give exceptions for some products or push off the tariff deadline further into the year.
“The market is indicating they don’t expect a lot to happen,” Klusa said. “It’s mostly a wait-and-see. The consistency on the application of tariffs has not been there.”
If tariffs are avoided, there’s still worries of consumer backlash against seed oils. Some restaurants including Steak ‘n Shake switched their frying oil to tallow earlier this year.
Dale Durchholz, an Illinois-based grain analyst, has cut down on seed oils in his own diet and says demand is going back to animal fats just like it swung away from tallow and butter in the decades after World War II.
“A longer-term shift has been initiated,” Durchholz said. “We are on the leading edge of seeing people change the way they eat.”
Farmers are expected to plant less canola and boost acres of wheat this spring, according to a Statistics Canada outlook on March 12. If realized, total acres of 21.6 million would be the second straight annual decline. Overall, acres have plateaued after hitting a peak of 23 million in 2017.
Manitoba farmer Chuck Fossay is sticking with his crop rotations for now and won’t plant less canola despite the demand concerns.
“It’s just a question of if we’re shipping canola to the U.S. or finding new markets,” he said.
Michael Hirtzer, Bloomberg News
