Conflict between China and Canada: a chance for Black Sea rapeseed?

Political factors continue to substantially influence the world markets of agricultural products. A trade confrontation between China and Canada in the canola market is intensifying now.

So, China continues restricting the access of Canadian companies to supplying canola seed to the country. The Chinese government has already decided to revoke the export registration of a second company. Earlier this month, it applied the same measure to Richardson International. In addition, China’s regulatory authorities have started inspecting all Canadian rapeseed cargoes arriving in the country for their compliance with quality standards.

China’s refusal to import Canadian canola provokes a sharp decrease in the commodity’s export price in Canada. It has lost 3% over the week, being already down 17% year-on-year.  

Being the world’s top exporter of canola, Canada sells the lion’s share of its product to China. In the 2017/18 season, the Chinese share in Canadian canola exports equaled 40%. 

In view of a downward price movement and uncertainty about further canola supplies to China, Canadian farmers may plant a smaller area to this crop in the 2019/20 season.

Unless the conflict is resolved shortly, that is becoming quite unlikely, this situation might cause redistribution of the rapeseed trade flows in the 2019/20 season. The Black Sea region may become an alternative to Canada as a source of this commodity, reports UkAgroConsult.