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Canadian canola loses China market as bilateral relationship weighs on grain trade

Posted on 2019-07-10
A view of Canadian canola field File photo: IC
 
Canada-grown canola, which has been restricted in China's market due to quality problems, faces the risk of full suspension of shipments to China, as there is no sign that the soured bilateral relationship is improving, industry insiders said Monday.
 
Quality issues continue to emerge in Canada's exports to China. Just several days after the North American country was asked to suspend meat shipments, its canola is also in trouble.
 
After encountering problems in passing China's quality inspections, a ship carrying Canadian canola - The Amazon - has been reportedly circling the East China Sea for four weeks after leaving Vancouver on May 7.
 
Whether the ship can eventually gain access to China will largely decide the fate of more Canadian canola exports to China, according to industry analysts.
 
"The vessel could be the last canola cargo from Canada," Lu Yun, an analyst at Shanghai JC Intelligence told the Global Times on Monday.
 
Three Canadian companies have been restricted in exporting canola to China. After the detection of pest contamination in their products, the two biggest Canadian exporters were blocked in March. A third canola exporter, Richardson International, received a non-compliance notice from China over quality concerns in April.
 
These restrictions have led many Chinese importers to suspend their canola business or find alternatives.
 
Many canola import agents halted business at the time of the Chinese Spring Festival and expanded imports of alternative products like soybeans, analysts said.
 
"Some canola import companies that used to offer products from Canada have started to offer products from Australia," Lu said.
 
China can easily find a way to reach a new supply-demand balance. However, Canadian canola exporters can hardly find alternatives to China, which will have significant impact on Canadian farmers, the industry and its broader economy, according to Lu.
 
China accounts for about 40 percent of Canada's canola seed, oil and meal exports, with seed exports to China worth some C$2.7 billion ($2 billion) each year, according to the Canola Council of Canada.
 
On Aicaigou, a B2B platform of Chinese internet giant Baidu, the canola import agents all import from countries like Australia, Mongolia and Ukraine. No agents for Canada are listed on the page.
 
In October 2018, China's General Administration of Customs cancelled its import restriction on rapeseed meal from India, a major source for China before 2011. 
 
"The temporary gap between China's canola demand and supply will soon be filled," Lu said.
 
The difficulty facing Canada's canola exports is its poor quality, and the strained China-Canada trade relationship doesn't provide a positive atmosphere to resolve the problem, Bai Ming, deputy director of the Ministry of Commerce's International Market Research Institute, told the Global Times on Monday.
 
Canadian Prime Minister Justin Trudeau said he believes canola is being used as a pawn in the trade war after China revoked the import licenses of two canola exporters. 
 
Canada has been involved in a diplomatic dispute with China over the extradition of Huawei CFO Meng Wanzhou.
 
"Canada is to be blamed for its current situation, because it missed several chances to resolve the tension," Bai added.

 


Source: Global Times