A beginner’s guide to canola: Price, uses & market overview

Explore a thorough overview of the canola market, learn how it works in simple terms and get to grips with its significance as a popular global commodity.
Updated: Nov 29, 2023

On this page, we explore everything you need to know about canola. Gain insights into canola market trends, pricing mechanisms, and the environmental impact of canola. 

Read on to learn more about this popular commodity and find links to beginner friendly guides explaining how you can get involved in canola. 

What is canola?

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Canola is a crop and its seeds are used to make cooking oil and animal feed. It’s versatile and hardy, and farmers often swap between it and wheat depending on which one offers the best price.

The name Canola itself stands for “Canadian oil low acid”. Canola comes from a plant that produces small yellow flowers which turn into pods containing valuable canola seeds.

Canola is grown around the world for its oil, food, and seed value. Canola oil is prized for its high stability and heart-healthy lipid profile. However, recent studies have thrown shade on its health benefits, with many experts claiming it is in fact the opposite. The meal left after oil extraction is a component of livestock feed rations, while whole canola seeds also supplement animal diets.

Canola market overview

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For the past half-century, the price of canola has experienced steady growth. Since it was first grown commercially in Canada in the 1960s, the market has grown exponentially, with total production approaching 80 million tonnes annually. 

Its price hit all-time highs in 2021, mainly as part of a broader turn towards green energy solutions. Canola is sold in 20-tonne contracts, and its crucial role in the development of biofuels meant the price of those contracts soared up more than 30%, all the way up to $1000. Before then, it had traded relatively flat since 2013.

As an example of how there are often multiple factors affecting the price at any one time, the demand surge was exacerbated by a supply-side issue as well. The expectation of poor future harvests helped push the price up even more.

Is canola valuable? 

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Yes, canola is a valuable commodity and there are numerous reasons why investors are attracted to the market. We have highlighted some of these key fundamentals below, explaining what they are and why they matter.

  • Canola is in high demand. Canola is an important oilseed crop and is used across the world for both food and industrial uses. It is often used in making vegetable oil and biodiesel. It is also an ingredient in many processed foods. 
  • It is a stable crop. Canola is grown in multiple regions, including Australia, the United States, and Europe. As it is produced globally, the risk of adverse weather conditions, pests, and diseases impacting harvests is smaller than crops grown in only a few regions. 
  • It has perceived health benefits. Some people believe canola has many health benefits, such as lower levels of saturated fats and high levels of omega-3 fatty acids. This has helped its demand, although there are some studies suggesting it is not healthy at all. 

How to invest in canola

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You can invest in canola by using a commodity trading platform. These platforms offer a range of commodities and are very easy to use. There are different platforms suitable for specific requirements. 

Some let you buy physical canola, others let you trade canola, and many are designed for investing in the grain. Visit our dedicated guide to discover how to invest in canola.

Canola in your investment portfolio

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A diverse investment portfolio can help protect you during market uncertainty, and the inclusion of canola can add value while allowing you to spread your money across various markets. 

Canola often moves independently to traditional investments like stocks and bonds. You can include canola in your portfolio as a hedge against potential losses. During times of economic uncertainty, investors view commodity grains such as canola as attractive options. 

Canola’s strong history and the fact it is a versatile commodity makes it a good long term play.

Canola vs other commodities

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Canola is an agricultural commodity and is part of the grains family, including wheat, corn, and rice. Each commodity is unique in its own way and offers different features for investors and traders. You can learn more about specific commodities using our dedicated guides below. 

  • Wheat. Wheat is a grain that is grown around the world and is used for various foods. 
  • Corn. Corn is one of the most versatile commodities with many uses, including livestock feed, biofuel, oil, and food. 
  • Rice. Rice is the most popular grain commodity and a staple for half the world’s population 
  • Soybean. Soybean is a major global commodity used for livestock feed and cooking oil.


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What is the market for canola?
Which country is the largest producer of canola?
Where does the United States get its canola?
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Risk disclaimer
Prash Raval
Financial Writer
Prash is a financial writer for Invezz covering FX, the stock market and investing. For over a decade he has traded spot FX full time while... read more.