Cana­dian canola loses China mar­ket

Soured bi­lat­eral re­la­tion­ship weighs on grain trade

Global Times US Edition - - BIZUPDATE - By Wang Yi

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 Canada 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.

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.

Canada has been in­volved in a diplo­matic dis­pute with China over the ar­rest of Huawei CFO.

“Canada is to be blamed for its cur­rent sit­u­a­tion, be­cause it missed sev­eral chances to re­solve the ten­sion,” Bai added.

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