China Lifts Restrictions on Canadian Canola, Demand Expected to Remain Muted – Reuters

China has lifted a three-year ban on the import of Canadian canola seed, as announced by Canadian officials on Wednesday. Although no reason was provided for this decision, it is expected that trade will be constrained due to low inventories and high prices.

China, the largest buyer of oilseeds globally, had halted shipments from two Canadian canola exporters in March 2019, claiming the presence of pests in the cargo. Canadian officials disputed these claims, which surfaced amid escalating political and trade tensions between the two nations following the arrest of Huawei executive Meng Wanzhou in Vancouver.

Canadian Trade Minister Mary Ng and Agriculture Minister Marie-Claude Bibeau expressed their approval of the decision to lift the restrictions and to reinstate the affected companies for exporting Canadian canola seeds.

However, the current low supply of canola, which is processed into meal for livestock feed and cooking oil, is likely to limit exports to China. In 2021, Canada, the leading global producer and exporter of canola, saw its smallest crop in 13 years, prompting importers to seek alternative sources and driving up global edible oil prices to record levels.

Haitong Futures analyst Kong Lingqi noted that while some trade may resume due to the lifting of restrictions, the import volumes are anticipated to be modest because Canada’s canola stocks are low this season. A more significant influx of imports may occur after September, when Canada’s new crop becomes available.

Additionally, China’s own canola harvest could impact trade dynamics. Johnny Huang, co-founder of Sitonia Consulting, indicated that China is expected to achieve a record canola yield this year, alongside an anticipated increase in soybean production.

Global edible oil prices, encompassing palm oil and soybean oil, have surged to unprecedented highs this year, driven by tight supplies and restrictions from major suppliers.