Canola: China's Canadian Geopolitical Punching Bag

On August 12, China's Commerce Ministry determined that Canada was guilty of "dumping" canola seed and assessed punitive tariffs of 75.8 percent on Canadian canola seed. This is the latest example of Chinese authorities using canola as a geopolitical punching bag. They move their foot from accelerator to brake, allowing imports to curb rising prices before choking them off to punish Canada for lining up with the United States on bigger issues. The surge of imports and declining prices China's commerce ministry alleges to have "harmed" Chinese producers in 2023 was created by Chinese leaders themselves after they lifted a 3-year-old restriction on canola imports in order to curb spiraling prices.

Commerce Ministry officials claim that Canada's subsidies and preferential policies distorted supply and demand, created severe excess capacity, and harmed Chinese rapeseed producers and processors. The findings are the mirror image of justifications for curbing imports of China's EVs offered by Canada, the U.S. and EU--suggesting that the AD finding is a tit-for-tat measure meant to punish Canada.

The canola seed AD investigation had been announced in September 2024 and importers had been stockpiling imported canola seed in anticipation of the dumping finding, as reported here several months ago. China's 1.8 million metric tons of canola seed imports in the first 6 months of 2025 constituted 95 percent of all rapeseed imports this year (canola is a type of rapeseed).  The earlier post reported creeping expansion of soybean oil use as a substitute for rapeseed oil in rapeseed-producing regions of southwest China. Importers complained of difficulties obtaining supplies from Russia, China's number-2 supplier of imported rapeseed. That post calculated that China relies on imported seed and oil for about half of its supply of rapeseed oil. 

Canola has been a geopolitical football for many years. China's imports of canola were about 4.5 mmt in 2017 and 2018 before China banned two top canola trading companies in 2019. In 2020 China declined to renew an agreement that set a higher limit on foreign material in shipments. These actions were widely viewed as punishment for holding Chinese executive Meng Wanzhou under house arrest for violating sanctions on Iran.

Rapeseed prices surged in China and worldwide during 2022 after Russia invaded Ukraine (see chart below). Three months later China thought it was a good time to ease the restrictions on canola imports and allowed the banned traders to resume canola business. Later in 2022 imports of canola bounced back and remained at high volumes during 2023. The rebound in imports late in 2022 and 2023 eased upward pressure on Chinese rapeseed prices. 

The investigation period for the AD investigation was 2023. The surge of canola imports that year which the Commerce Ministry attributed to "dumping" was actually a return to normal trade triggered by China lifting its 3-year-old restrictions on imports. Chinese rapeseed prices stopped rising during the 2023 investigation period vis-a-vis the surge seen in 2022...but stopping the spiral of prices was likely the intended outcome of lifting its restrictions on canola imports. 

Canola imports from Canada reported by China customs data; monthly rapeseed price in rural markets from China National Bureau of Statistics. 

All commodity prices in China were under upward pressure during 2022, but they have been falling since 2023. Comparing domestic rapeseed prices with peanut prices--an oilseed widely grown in China that has minimal imports--shows that prices of both oilseeds were rising during 2022. The rebound of canola imports during the 2023 investigation period curbed the increase in rapeseed prices, but peanut prices kept rising until mid-2023. Both prices fell in 2024 as a broad deflation of commodity prices in China took hold. Rapeseed prices surged again in early 2025 as China indicated its intention to restrict imports of canola seed, oil and meal. Peanut prices kept falling in 2025.

Monthly prices in rural markets from China National Bureau of Statistics.

The claim of unfairly low Canadian prices is specious. The unit value of imported Russian rapeseed was less than the unit value of Canadian canola in 2023 and they were essentially equal in 2024-25. Both prices were consistently about one third lower than prices of Chinese domestic rapeseed. However, a description of the investigation said European Union price data was used to calculate dumping margins. (This may be intended to hit back at the Canadians for China's "nonmarket economy" designation that allows other countries to use price data from third countries in AD investigations of Chinese exports.) 

C&F unit values of imports @ border calculated from China customs data.
China farm price from average price in rural markets reported by China National Bureau of Statistics converted to U.S. dollars at the official exchange rate. 

The commerce ministry alleges "harm" to Chinese rapeseed producers, processors and service providers, but rapeseed has been a money-losing or marginally break-even crop in all but a few years since 2000. According to official agricultural cost of production surveys published annually by China's National Development and Reform Commission, rapeseed has been a loser for Chinese farmers every year since 2012. The survey data show the steepest loss (as a percent of production value) was in 2016, the year after China ended its support price for rapeseed. Rapeseed was close to break-even during 2022, but that was not a "normal" year. The loss grew to 10.2% of production value in 2023--the antidumping investigation period--but that year's loss was smaller than any losses reported during years 2012-2021. The data suggest that the only way for rapeseed to become profitable would be to maintain its domestic price about 40 percent above prices in exporting countries.

Compilation of data from China National Development and Reform Commission.
Profit/loss rate is percent of value of production. Most recent data are for 2023.

China's move to shut down imports of canola will restrict its supply of oilseeds and edible oil. According to one analysis of the dumping finding, the new tariff will raise the cost of imported canola slightly above the price of domestic rapeseed, making it uncompetitive. Imports for calendar year 2025 are expected to decline 12 percent from last year, likely resulting in tight supplies of rapeseed oil and higher prices in China. 

Chinese market observers note that rapeseed oil prices have already bumped upward this week. In the next few months--with China flooded with Brazilian soybeans--this will boost substitution of soybean oil for rapeseed oil even further. In Q4 2025 when Brazilian soybeans stop arriving, China could be short of oilseeds if there is no trade agreement with the U.S., China continues its embargo on U.S. soybean imports, and it maintains mega-tariffs on Canadian canola seed and oil.