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Steadier demand sought in China for Canadian canola

(Canola Council of Canada photo)

CNS Canada — Chinese demand for Canada’s canola and canola oil remains a key driver for the Canadian industry — but China has been an inconsistent customer in the past, which makes developing ongoing relationships important.

China in 2013-14 imported 3.9 million tonnes of Canadian canola, accounting for almost half of Canada’s total exports during the year of 8.6 million tonnes, according to Canadian Grain Commission data.

But Chinese demand has varied widely over the past decade, while Japan, the No. 2 destination in 2013-14, consistently imports about two million tonnes of the Canadian oilseed.

Data for the 2014-15 crop year is only available through September, but China is already showing strong demand once again.

Canola oil is also flowing freely to China, with the country representing the second-largest destination behind the U.S.

The Canola Council of Canada is active with market development projects in China, including a Canola Info program recently launched in Beijing, council president Patti Miller said. “We’re generating a lot more interest in canola… The demand is there, definitely.”

That demand was highlighted earlier this month when Ontario-based LeMine Investment Group signed a seven-year agreement worth $1 billion to export canola oil to a Chinese buyer, according to a Canadian government backgrounder. [Related story]

“Quality and quantity”

“Currently we are purchasing from the suppliers and arrange freight to our warehouse in China,” LeMine president Thomas Liu said via email from China.

“Our canola oil client, Fengguan Group, is one of the biggest rapeseed oil distributors in China,” he added, noting China is heavily dependent on edible oil imports.

“As the biggest edible oil exporter, Canada’s canola oil has both quality and quantity.”

Canada’s oilseed industry has invested heavily in plants over the past few years and has significantly increased capacity, Miller said.

Canada shipped 885,000 tonnes of canola oil to China in 2013, according to Statistics Canada data, and has moved 430,100 tonnes to the country during the first nine months of 2014.

A trade dispute over the presence of blackleg in Canada’s canola crop slowed movement of seed to China in 2010. Discussions to regain access are still ongoing, but Canada currently has access to 13 Chinese processing plants, including two in China’s own rapeseed-growing region, said Miller.

China had the capacity to import seven million tonnes of canola annually, she estimated, although Canada competes with Australia into the market.

While any demand is welcomed, one issue with China in the past has been consistency. The dispute over blackleg cut into seed exports for awhile, while more recent issues over canola meal stopped that movement completely in 2013-14.

Small amounts of Canadian canola meal are now starting to move once again.

“One of our goals as an industry is to have stability in our trade relationships,” said Miller, noting work on market access issues and trade policy is ongoing.

— Phil Franz-Warkentin writes for Commodity News Service Canada, a Winnipeg company specializing in grain and commodity market reporting.

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