China has dramatically picked up its imports from Canada in the 2020-21 marketing year. The Canadian Grain Commission (CGC) reported this week that at the end of October, China imported 3.17 million tonnes of wheat, barley, flax, canola and peas from Canada, compared to 1.51 million the same point in 2019-20.
With China very eager to purchase as much as it can from pretty much anywhere in the world, the economic superpower has upped its canola purchases from Canada. While not back to levels prior to the arrest of Huawei executive Meng Wanzhou two years ago, China has certainly picked up its game in the 2020-21 marketing year. The CGC said China imported 716,600 tonnes of canola, which is almost 88 per cent more than the 381,800 tonnes the same time last year. China also bought 9,900 tonnes of flax at this point in 2020-21, compared to none the previous marketing year.
The biggest increase in China’s grain imports from Canada has been barley. Its purchases have ballooned by a whopping 205 per cent at 716,400 tonnes versus 381,800 tonnes at the same point in the 2019-20 marketing year. At 661,600 tonnes, China’s wheat purchases have jumped 146 per cent, compared to October of last year when it imported 268,900 tonnes.
Of all the Canadian grains, oilseeds and pulses it has bought, peas mark China’s biggest import by tonnage. At 968,700 tonnes, its acquisitions have jumped 62 per cent so far into 2020-21, compared to the previous year’s 596,000 tonnes.
Demand is not just limited to China, as exports have increased across the board by a third. Also, domestic usage is up by a little more than five per cent.
That said, there’s little doubt that China ramping up its imports from Canada has played a role in price increases. Taking canola as an example, it wasn’t really that long ago Prairie farmers were faced with much lower canola prices after the Canada-China dispute began.
However, there is a problem on the horizon for Canadian canola — that of it running out. The CGC reported total canola exports were about 4.24 million tonnes after 17 weeks into the 2020-21 marketing year, for an increase of 38 per cent. Domestic usage was at 3.45 million tonnes, a pinch under the 3.48 million tonnes at this point in 2019-20, but with crushers reportedly running close to full capacity.
There is a strong feeling in the trade that if canola exports and the domestic crush continue at their current paces, Canada will be faced with quickly dwindling ending stocks. Price rationing — that is, raising the price to where buyers will balk at purchasing — may very well be the only measure to prevent Canadian canola stocks from running out. Some in the markets say that price rationing has already started.