China Delays Canola Rule Change to Work Out Deal With Canada

  • Sept. 1 date for tigher certification standards won’t apply
  • Changes threatened to hurt $1.5 billion in Canadian exports

China put off plans to impose tougher restrictions on canola imports from Canada as the two countries negotiate a longer-term agreement over shipments.

Premier Li Keqiang and Canadian Prime Minister Justin Trudeau announced a temporary resolution to their dispute following a meeting in Beijing on Wednesday, agreeing to extend the current canola trade regime. China had said tighter certification standards for imports would be imposed from Sept. 1, threatening Canadian exports valued last year at C$2 billion ($1.5 billion).

“We believe both sides will be able to make some mutual adjustments, with the larger picture of China-Canada trade and ties in mind,” Li said at a joint press conference with Trudeau, who is on a week-long visit to China. “We have agreed to extend the current regime and at the same time the relevant authorities will be in close touch to work out mutually acceptable ways to resolve this issue.”

Canada is the world’s top grower of canola, used to make cooking oil and animal feed, and has become increasingly reliant on sales to China. The Asian country planned to reduce the amount of foreign material allowed in each shipment to 1 percent from 2.5 percent. Canadian Trade Minister Chrystia Freeland told reporters after the press conference that the two countries are seeking to negotiate a memorandum of understanding over the issue.

Slow Buying

Exporters have said they’ve been told by Chinese officials that the restrictions are intended to limit the potential spread of blackleg, a fungus that causes significant yield loss. Canada has said additional cleaning is costly, unnecessary and won’t be any safer because seeds would then be exposed to other kinds of contamination.

Last year, China got about 90 percent of its canola from Canada, or about 3.9 million metric tons, government data show. Buyers may be slow to boost purchases until a clearer policy is in place, according to Lu Yun, an analyst with Shanghai JC Intelligence Co. “Chinese companies may not rush to book cargoes until the policy is clear, but they are keen to buy because imports now give very good crushing margin,” Lu said.

Buyers in China have booked a total of four cargoes for October shipment at the 1 percent standard, said Xu Aixia, an analyst at Everbright Futures Co. That’s pressured domestic rapeseed meal prices, with the contract for September delivery slumping 4.7 percent on Wednesday.

Canola prices have slumped about 15 percent from this year’s closing high in May. Futures were 0.6 percent lower at C$450.30 a ton in Winnipeg on Wednesday.

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