ICE Canola Futures Move Up, China Uncertainty Continues

Gains in the e-CBOT soybean complex helped to spark some buying overnight. Some of the buying in canola also came in anticipation of further gains being posted in CBOT soybean and soyoil futures with the start of the North American day session.

Continued harvest delays in western Canada were helping to encourage some support.

However, the main item hanging over the market continues to be the new import regulations China has implemented on canola imports.

Canada will send food-safety and agriculture officials to China within days to seek a resolution to Beijing’s refusal to accept canola with blackleg disease. China notified the Canadian Food Inspection Agency in a letter a few days ago that it won’t accept canola seed as of November 15 without a certificate showing it is free of blackleg, a disease that is no longer a major threat in Canada, but continues to be commonly found in canola seed.

"This is a very serious issue, and we are working with Chinese officials to resolve this issue for Canadian canola producers," Agriculture Minister Gerry Ritz said.

China imported 2.6 million metric tons of canola seed from Canada during the 2008/09 (Aug/Jul) crop year, accounting for more than a third of that year’s total seed exports.

CFIA spokesman Tim O’Connor says, "We want to highlight that this is not a food safety issue, rather it is a trade and market access issue."
O’Connor added that "we’re confident that Canadian farmers grow the best canola in the world and we’ll continue to work on their behalf to resolve this situation."

Also tempering the upside in canola will be declines seen overnight in Malaysian palm oil futures and the reduced requirements from the domestic canola processing industry.

As of 9:46 am EDT, there were 1,802 canola contracts traded.

As of 9:46 am EDT, no western barley contracts had been traded.