China is afraid of a shortage of canola, Chinese importers have stolen up to 10 lots of Canadian canola

Chinese importers ordered up to 10 cargoes of Canadian canola following Prime Minister Mark Carney’s visit to Beijing earlier this month, two trade sources told Reuters, easing a supply shortage and potentially displacing Australian exports.

According to two traders with direct knowledge of the situation, Canadian canola deliveries are expected between February and April. Each cargo is approximately 65,000 metric tonnes.

The 10 cargoes, or approximately 650,000 metric tonnes, represent more than 10% of China’s total canola imports in 2024 and about 26% of last year’s total.

“Getting Canadian canola into the Chinese market is easy. Processors have already booked these cargoes,” said one source at an international agricultural company.

The traders asked not to be identified as they were not authorized to speak publicly on the matter. During Carney’s visit to Beijing, China and Canada reached a preliminary trade agreement that included lower tariffs on Chinese electric vehicles in exchange for lower levies on Canadian canola.

Canola is milled to produce vegetable oil and other products. The protein-rich meal left after milling is used as livestock feed.

In August last year, China imposed preliminary anti-dumping duties on Canadian canola. It then resumed purchases of Australian canola, which had been suspended after China introduced biosecurity measures that disrupted trade in 2020.

State-owned COFCO has purchased about 500,000 tonnes of Australian canola in recent months, raising hopes among Australian farmers for further purchases, Reuters reports.

Two cargoes of Australian products that arrived in China have not yet been processed, paralyzing China’s vast canola processing industry for the first time in years.

“We’re not sure what’s happening with the Australian cargoes, as the first cargo that arrived in China hasn’t been processed yet,” a source told Reuters.

China is experiencing a shortage of rapeseed oil, supporting prices.

The average spot rapeseed oil price was 9,906 yuan/tonne on January 19, and 9,976 yuan/tonne on January 23, representing a price increase of 0.71% over that period.

Rapeseed oil prices have recently risen, and the ongoing shortage of rapeseed oil on the spot market is providing short-term support. Currently, Australian canola has not yet entered the pressing stage, and domestic oil mills are closed, leading to stagnation in rapeseed oil production and a persistent supply shortage. Demand for rapeseed oil ahead of the holidays is supporting the market. The Meishengchai policy is expected to be implemented. The main downward pressure is strong expectations for increased long-term supply: improving economic and trade relations between China and Canada, as well as an expected increase in canola imports from Canada, will improve the domestic supply structure of rapeseed oil and put pressure on rapeseed oil prices in the long term, according to Chinese analysts.

In the short term, a recovery in supplies has not yet been observed, driven by production expectations; the expected increase in imports is mainly driven by rising rapeseed oil prices.

Tags: China, prices, Canada, rapeseed oil