Singapore/Beijing | Reuters — Chinese state-run trading firm COFCO has booked a cargo of about 50,000 metric tons of new-crop Australian canola, two traders told Reuters, just days after Beijing imposed temporary levies on top supplier Canada.
The purchase would mark China’s first imports from Australia since 2020 when Australia, the world’s second-largest canola exporter, was locked out of the Chinese market, largely due to phytosanitary restrictions aimed at preventing the spread of fungal plant disease.
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Why it matters: Levies on Canadian canola seed, oil and meal are expected to shut the Chinese market to Canadian canola. Canada has been China’s top supplier of the oilseed.
COFCO has purchased the cargo for November-December shipment and is negotiating for more deals, according to the two sources with direct knowledge of the deal.
The purchase price is below $600 per ton, including freight, the sources said.
COFCO did not immediately respond to Reuters’ request for comment.
Reuters reported in July that Canberra was close to reaching an agreement with Beijing to allow Australian suppliers to ship five trial canola cargoes to China. It remains unclear whether COFCO’s recent purchases are part of this trial agreement.
“One cargo is a done deal and there is talk (they are) going to buy more,” said one of the sources, a Singapore-based trader. “Very soon there are going to be more deals.”
As the world’s largest canola importer, China has sourced nearly all of its canola from Canada in recent years. However, Beijing’s decision last week to impose a temporary 75.8 per cent levy is expected to cut off Canadian canola from the Asian market.
“The price is very good if you look at crush margins for canola in China,” said the second trader also in Singapore, adding that canola to be shipped to China is from Australia’s new crop due to be harvested in the coming months.
“By the time it arrives in China it will be end of December or early next year.”
Both cargoes were genetically modified organisms (GMO), which require special licenses in China, the sources said.
Acquiring GMO approval was the final hurdle before China would agree to import canola cargoes from Australia, according to two other sources familiar with the matter.
On Friday, China’s Ministry of Agriculture and Rural Affairs (MARA) granted seven GMO Safety Certificate approvals to COFCO Oils & Oilseeds Trading Co., a COFCO subsidiary, without disclosing specific details, an official website showed.
MARA did not immediately respond to Reuters’ requests for comment.
— Additional reporting by Peter Hobson in Canberra.
