Menu

Topics

Connect

Comments

Want to discuss? Please read our Commenting Policy first.

Demand for Canadian canola soars as shippers find roundabout way to reach China

ABOVE: While pork and beef exports to China can resume, Canadian canola producers are still blocked – Nov 6, 2019

Canadian canola prices have soared to the highest in nearly two years, despite a diplomatic dispute between Ottawa and Beijing, as exporters find roundabout ways to reach top oilseed buyer China.

Story continues below advertisement

Chinese authorities have since March 2019 blocked canola shipments by two Canadian exporters, an action they took after Canadian police detained a Huawei Technologies executive in late 2018 on a United States warrant.

READ MORE: China lifting meat ban ‘a good first step’ for canola, producers association says

The dispute however, has not spoiled China’s appetite for canola, which is mainly processed into vegetable oil. While China is buying less from Canada directly, it has bought canola oil instead from Europe and the United Arab Emirates, with some of that oil made from Canadian canola, traders said.

ICE canola futures on Tuesday hit the highest nearby price since October 2018. Prices of China’s rapeseed oil, another name for canola oil, have also rallied, partly because of limited Canadian supply.

“Profits are extravagant. Anyone who has the resources to import (canola oil) will definitely buy,” said a manager with a China-based canola importer.

Story continues below advertisement

“It is like gold oil now.”

Canadian canola exports to China fell 45 per cent year over year during the 11-month period through June, however, total canola exports have jumped nine per cent, helped by a tripling of sales to France and double the shipments to the UAE.

Canada is the world’s biggest canola producer, and the yellow-flowering plant earned farmers C$8.6 billion last year, the most of any crop.

Story continues below advertisement

China meanwhile boosted canola oil imports from Europe, Russia and Australia, with some of that oil made from Canadian canola, said another China-based trader.

The price rally left farmer Mary-Jane Duncan-Eger, who grows canola near Regina, Saskatchewan, “super-mystified,” considering that Canada is heading for a bumper crop.

To lock in high prices, she pre-sold 50 per cent of her anticipated harvest, up from the 30 per cent she usually pre-sells at this time of year.

“I’m pretty happy. As long as someone is buying it, I don’t care who.”

Global canola oil demand has prompted Canadian crushers – who include Archer Daniels Midland Co and Bunge Ltd – to process canola at a brisk pace, said Brian Comeault, commodity risk manager with Cargill Ltd’s Canadian marketing service MarketSense.

Story continues below advertisement

Exporters are also selling more seed to the UAE, where crushers produce oil to sell to China, he said.

Bad crop weather and insect attacks in Europe have also lifted prices.

Rapeseed production in the European Union and Britain is expected near the 13-year low seen in 2019.

This has led European importers to scour other countries for supplies, especially those with weaker currencies that make purchases more profitable, consultancy Strategie Grains said in a report.

“Canadian canola has the biggest edge,” it said. “Competition among importing countries will probably be fierce over the coming months.”

Advertisement

You are viewing an Accelerated Mobile Webpage.

View Original Article