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Canola exports to China hit record just months after trade dispute

Agreement signed in September to maintain current levels until early 2020.


CALGARY — Strong demand from China helped lift canola exports to a record $845 million in January and boost the national trade surplus, Statistics Canada said, a sharp rebound for a sector threatened by a trade dispute last year.

China had said last year that because of disease concerns, it would toughen restrictions on the amount of foreign materials – such as weeds, other crops and detritus – permitted in Canadian canola exports. Canadian producers and handlers were worried this could hurt demand for the oilseed, which is used to make cooking oil, animal feed and biofuel.

The dispute was partially resolved as part of wider talks between Prime Minister Justin Trudeau and Chinese Premier Li Keqiang, with an agreement signed in September to maintain the current levels until early 2020.

The uncertainty helped push down canola exports to China to 80,000 tonnes in September, the lowest since 2013, before rebounding to a record high of 741,000 tonnes in January.

The value of all Canadian canola exports was up 38.4% in January compared from December, and more than double from October, Statistics Canada, helping push a third straight trade surplus for Canada.

Export volumes of canola reached a record level of about 1.4 million tonnes in January according to Statistics Canada, driven in part by lower prices that appealed to international buyers, said Ken Ball, a senior adviser at PI Financial.

“The main reason was canola was just extremely cheap,” he said.

Prices have since climbed, said Ball, but the market still looks strong for the year with potential for close to 20 million tonnes of demand, and supply expected to be only a few hundred thousand tonnes higher.

“We could be left with a fairly tight situation,” said Ball.

The Canola Council of Canada said that exports could be further boosted if Canada and China were to reach a free trade deal.

The council released a report on Monday that showed if China eliminated the nine per cent tariff on canola seed, exports to the country could increase by up to $1.2 billion, the equivalent of about 10 per cent of Canada’s 18.5 million tonnes of production.

China was the second largest export market for canola after the US last year, taking in 4.8 million tonnes of seed, oil and meal worth $2.7-billion, according to the Canola Council.

News from © Canadian Press Enterprises Inc. 2016

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