Glacier FarmMedia COVID-19 & the Farm

EU biodiesel sector balks at canola price tag

(Resource News International) — The current price tag attached to Canadian canola is curbing immediate and short-term demand from the European biodiesel sector, with major Canadian exporters not thought to have made any sales.

The prospects for shipping Canadian canola to Europe were twice boosted over the winter by unrelated rulings from the European Union. A March 2009 decision to authorize imports of a genetically modified canola variety cleared the way for resumption of trading with Canada.

That was followed shortly afterward by a decision to impose an import tariff on U.S. biodiesel, on the grounds that it is unfairly subsidized by the U.S. government.

“There is a substantial spread between Canadian canola and European rapeseed, even though freight rates have come down dramatically over the past year,” said Lawrence Yakielashek, general manager at Alfred C. Toepfer Canada.

As of May 5, Canadian canola cost C$451.20 per tonne for July delivery.

“Canola basis levels are extremely high and they just don’t calculate to Europe right now. Ultimately, everything comes down to price,” he said.

At some point Yakielashek does see a place for Canadian canola in the European market although it is impossible to know when. It may work out in 2009 — or it may not, he said.

Besides, he added, Canadian exporters are busy filling Chinese canola demand.

David Hickling, vice-president of canola utilization for the Canola Council of Canada, said while the council hopes to see canola seed and oil sales to Europe down the road, he is not aware of anything concrete yet.

Both the EU tariff on U.S. biodiesel and the clearance of T45 canola for exports to Europe are positive for Canadian canola seed sales but Europe’s current rapeseed supply situation is “pretty good,” Hickling said.

“They had good production last year and they imported canola from places like Australia and Ukraine earlier on. So, at least in the short-term, their supplies seem ample,” Hickling said.

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