Australian canola growers shut out of Chinese market

Canada is not the only canola exporter having difficulty with the Chinese market.

China has been “effectively closed” to Australian canola due to strict import regulations, according to the Australian Oilseeds Federation (AOF).

Nick Goddard, executive officer of AOF, said China started enforcing a zero tolerance policy for blackleg disease in late 2020, causing trade to come to a “quick stop.”

“There is no indication that the zero tolerance for the presence of blackleg will be removed from the Chinese quarantine requirements anytime soon,” he said.

He doesn’t anticipate any Australian exports to China as a result. The last Australian shipment sailed in December, 2020.

James Maxwell, senior insights manager with Australian Crop Forecasters, said that is not highly unusual.

“China’s buying of Australian canola has always been sporadic,” he said.

Annual sales have been as high as 900,000 tonnes in the past but there are many years in which China buys nothing.

“They very much jump in and out, so it’s not overly difficult or unusual for them not to be buying Aussie canola,” Maxwell said in an email.

“I’m sure that the political tensions probably do have a hand in China’s lack of buying, but at the same time canola has been at record prices over the past year and a half, so it’s not a stretch to assume that they’re substituting canola with soybeans, etc.”

Many believe Australia’s call for an independent investigation into the origins and handling of the COVID pandemic prompted China to block barley imports from Australia.

But China insists Australia was dumping the commodity in the market for cheaper than the cost of production, which is why it imposed an 80.5 percent tariff on Australian barley on May 19, 2020.

That dispute is before the World Trade Organization.

Australia will have another bumper crop of canola to move in 2022-23. The Australian government is forecasting 6.6 million tonnes, slightly below last year’s record of 6.73 million tonnes.

Maxwell is forecasting 6.8 million tonnes, which could result in 5.5 million tonnes of exports, more than double the five-year average of 2.48 million tonnes.

He hopes the phytosanitary barriers to trade with China are resolved given the huge crop that needs to be moved.

“There’s no reason we couldn’t see a million tonnes shipped to China,” he said.

Goddard noted that it has been very wet in New South Wales, where it continues to rain. The crops still looks good, but farmers will have a tough time getting into their fields to harvest, which could pull down the production number.

“Nonetheless, six to 6.5 million tonnes can be pretty much assured, short of some sort of disaster happening with crops in the next few weeks,” he said.

Maxwell thinks there is more upside than downside and that seven million tonnes is possible if conditions stay favourable.

Australian canola remains at a significant discount to Canadian canola due to the weaker Australian dollar, so that could result in a busy export program to markets around the world.

“The only real limitation is our own export capacity,” he said.

The country’s main export market is the European Union, which prefers Australian canola over Canadian canola because it is primarily non-genetically modified and the meal can be fed to animals in the EU.

Australia exported 5.6 million tonnes of canola last year, taking advantage of Canada’s poor crop.

“With Canadian production back above average, we may lose some of that market share,” said Maxwell.

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