Canadian canola shipments restart to China, posing challenge to Australian exports

A major purchase of Canadian canola by a Chinese importer following Prime Minister Mark Carney’s recent trip to Beijing has energised Canadian farmers’ prospects while potentially posing a competitive challenge to Australian suppliers. 

China has resumed imports of Canadian canola, with a Panamax cargo of approximately 60,000 metric tons marking the first shipment since a halt was imposed in October, according to a Reuters report. 

This significant deal signals a potential thawing of trade tensions related to the oilseed between the two countries. 

The cargo is anticipated to be shipped after March, according to information from two traders directly involved with the transaction. 

Trade thaw and tariff cuts

This resumption is a crucial development for Canadian farmers and exporters, offering renewed access to a major international market following a period of uncertainty and restricted trade flow.

Mark Carney, speaking on Friday, announced a significant reduction in Chinese tariffs on Canadian canola seed. 

As part of an initial trade agreement between the two nations, China is expected to lower the combined tariff rate from the current 84% to approximately 15% by March 1. 

This substantial tariff cut is a key component of the deal, which also includes reciprocal concessions, notably a reduction in tariffs on Chinese electric vehicles entering Canada. 

This trade development signals a thawing in relations and is anticipated to provide a major boost to Canadian canola exporters.

China’s Ministry of Commerce had announced later on Friday that it plans to “adjust” its current anti-dumping measures targeting Canadian rapeseed. 

This brief statement, however, offered no specific details on the nature of these adjustments, leaving open questions about the extent and timing of the policy change. 

The anti-dumping duties were originally imposed as part of a broader trade dispute between the two nations. 

The planned revision suggests a potential thawing of tensions or a concession from Beijing, which could significantly impact Canadian agricultural exports. 

Shifting trade dynamics

The recent increase in Chinese imports of Canadian canola signals a shift in global oilseed trade dynamics. 

This development comes despite Australia’s efforts to expand its own canola exports to China, the world’s largest importer. 

Australian State-owned COFCO had previously purchased a significant volume—approximately 500,000 tons—of Australian canola in recent months, suggesting a diversified sourcing strategy by China, according to the report. 

Australian canola purchases by China have restarted after a roughly five-year hiatus.

This resumption follows China’s imposition of anti-dumping duties on Canada and comes after biosecurity restrictions had halted trade in 2020. 

Meanwhile, expectations of increased supply caused Zhengzhou rapeseed meal futures to drop 2.4% on Monday, hitting a low not seen in over a year.

Collapse of Chinese imports of Canadian canola

China imposed preliminary anti-dumping duties of 75.8% on Canadian canola in August, effectively stopping shipments.

This action, which followed an anti-dumping probe, is part of a larger diplomatic and trade dispute between the two nations.

For the first time since at least 2015, China’s extensive canola crushing sector has been completely paralyzed due to the stoppage of Canadian shipments, based on data from the consultancy MySteel.

Trade data indicated that monthly Chinese imports of canola dropped to zero in October—the first time in two decades this has occurred.

Consequently, MySteel reports that crushing plant inventories have been completely depleted.

A final ruling is expected from Beijing in its anti-dumping investigation concerning Canadian canola, with a deadline set before March 9. 

Canola, also known as rapeseed, is processed to create cooking oil and various other products. The resulting protein-rich meal is utilised as feed for livestock.

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