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Quick fix to China canola ban ‘unlikely’

There’s more to it than Huawei, according to a MarketsFarm’s report

China’s de facto ban on Canadian canola imports has depressed canola prices, which will remain under pressure until the ban is lifted, concludes a report prepared by MarketsFarm, a division of Glacier FarmMedia.

“A quick resolution to the Chinese canola import situation is highly unlikely,” the report says.

The same holds for Canadian and American soybeans.

“North American oilseed prices will continue to push lower as long as stocks remain at record levels,” the report says. “Unless there is severe weather issue in 2019, prices are not expected to rebound significantly.”

Canadian canola exports to China were strong until earlier this year, but by the end of March dried up. As a result MarketsFarm is forecasting record canola ending stocks of almost 4.7 million tonnes at the end of the crop year July 31, 2019. That would be a 100 per cent increase from 2017-18’s 2.5 million tonnes.

When China stopped importing Canadian canola it claimed shipments were contaminated with weed seeds and plant diseases.

The Canadian Food Inspection Agency says samples it has of those shipments meet export standards.

Chinese officials have so far rebuffed the Canadian government’s request to a face-to-face meeting to discuss the complaints.

That’s led to speculation China’s actions are meant to show displeasure with Canada’s decision to arrest Huawei executive Meng Wanzhou last December at the request of the United States.

But Huawei is just one factor, the report says. The others are:

  • Escalation of the Trump trade war with China and the implications for the soybean markets and trade in general.
  • African swine fever and the impact of the disease on Chinese demand for soybeans this year and next.
  • The long-term trend of increasing soybean and corn production in South America and the increasing competitiveness of production in the region.

“All of the above factors point to reduced oilseed prices and specific pressure on the canola markets,” the report says. “The loss of the Chinese market will push canola prices lower to try to regain other traditional markets. At the same time, U.S. soybean prices will be pushed lower by large stocks and the loss of the Chinese market. This downward spiral will continue to pressure prices through the 2019-20 marketing year. The message is clear, sell canola and soybeans on rallies, even if prices are not what they have been in recent years.”

About the author

Reporter

Allan Dawson is a reporter with the Manitoba Co-operator based near Miami, Man. Covering agriculture since 1980, Dawson has spent most of his career with the Co-operator except for several years with Farmers’ Independent Weekly and before that a Morden-Winkler area radio station.

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