Carbon Markets & Canola

Fund short-covering has run up the canola market in recent weeks, but as momentum dies out, with fundamentals unchanged, the path of least resistance now looks lower.

As carbon markets steadily mature, their impact on grain returns will differ by crop, depending on each one’s symbiotic relationships with the natural environment… and the current supply/demand situation. This report looks at how canola aligns with new value-add and low-emissions land management strategies.

Background

Early trading of carbon offsets left a bad taste in nearly everyone’s mouth. Platforms made predictions about the avoidance of emissions related to individual projects, and sold the offsets to major global brands, only to find in the auditing process after the fact that far less-than-expected reductions occurred.

Voluntary carbon markets sprung up around the world offering (mostly unvalidated) asset valuations to buyers of offsets in exchange for (mostly inconsistent) sets of practice adoption by sellers. These platforms have been operated by big-name entities in agriculture, none of which succeeded to validate and monetize true low-emissions farming practice adoption, blowing spectacular amounts of cash along the way.