Canola Rally Gets Boost from Palm Oil Supply Crunch

The recent rally in canola prices is being supported by palm oil production problems and rising biodiesel mandates in Indonesia and Malaysia, according to a report from Farmtario.

The Indonesian government's new biodiesel mandate of 50% blending (B50) has resulted in a bump in domestic palm oil consumption, limiting exports of the world's largest vegetable oil. As a result, Indonesia's industrial palm oil use is expected to rise 16% to 17.4 million tonnes in 2026-27.

Palm oil strength is also contributing to canola's rally, with nearby palm oil futures up 19% from the start of the year as of August 14. Analyst Errol Anderson believes that if crude oil prices continue to rise above $90 a barrel, canola will continue to roll.