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Canola to China – Update

canolablogTwo weeks since news emerged that China is ending all shipments of canola seed from a major Canadian exporters, sources now say that another major exporter is facing similar trade restrictions. Justin Trudeau responded late last week to claims that sales of Canadian canola seed to China from all exporters has halted, “we’re going to roll up our sleeves and work with the Chinese officials to demonstrate that canola should continue to flow safely from Canada to China.” While no commodity-wide policy has been declared from officials, claims that the Chinese are increasingly hesitant to buy Canadian canola has been verified recently as Canadian exporter, Viterra Inc., has been banned from exporting canola seeds to China as well. According to an article in the Financial Post, allegations are that “China blocked canola shipments from a second Canada-based producer on Tuesday over alleged contamination issues” (Aleksandra Sagan, March 2019).

In a news release issued by the Canola Council of Canada last week, Jim Everson (the President of the CCC) maintained “optimism that Chinese concerns with canola trade could be resolved quickly,” unfortunately, “technical discussions to date have not indicated an immediate resolution is possible. Canola seed exporters report that Chinese importers are unwilling to purchase Canadian canola seed at this time.” Concerns from industry insiders that China would extend this boycott to other agri-exporters have proven legitimate with the announcement of the 2nd Canadian company to be banned.

Indeed, the concern over the future of canola exports continues as “average weekly movement through licensed facilities (week 24 through week 33) is the lowest seen over this period in four years” (Cliff Jamieson, March 2019). The Canadian federal government will certainly need to be active in mending the relationship with Canada’s 2nd largest trading partner or continue to actively seek out alternative buyers for Canadian canola. The Canadian economy has already started to react to the news as canola farmers are forced to either sell for less or hold in hopes prices will rise in the future. For now, the ban has been limited in scope effecting just the two grain companies and one commodity, only time will tell if further restrictions are announced and how the Federal government reacts.