Australian canola back to compete in Chinese market

Canadian canola shipments to China are expected to start slowing down as Australia has re-entered the Chinese market as a competitor following a four-year ban.

Canadian supplies are already very tight, however, and the introduction of a new competitor into the key Chinese market is unlikely to alter overall supply/demand projections greatly, according to a Canadian exporter.

Australia was initially shut out of the Chinese market in 2009, when China barred Australian canola imports due to concerns over blackleg. Canada also faced import restrictions at the time, but was able to reach a solution allowing movement to continue into certain ports in China. Australia now has similar access into China as Canada.

“We have a competitor, which we didn’t have before,” said canola exporter Adrian Man of Richardson International in Winnipeg.

There will be some Australian cargo taking over shipments that Canada would have sold otherwise, “but overall, our supply/demand is still very balanced so losing some quantity to Australia won’t make a big difference,” said Man.

He expected any Chinese export business that shifts over to Australia would help “loosen up” the domestic market and likely help Canadian crushers source seed a little easier.

“It will be a competitive factor, but we don’t see it as a big issue at the moment,” said Man, noting Australia has always been a competitor in the past.

In addition, the strong Chinese demand for canola, coupled with continued blackleg limitations, means Canada is already not selling as much canola into China as it could.

China has purchased 300,000 tonnes of Australian canola since the ban was lifted earlier this month, according to Chinese reports. That business was reportedly conducted at about US$680 per tonne, which compares with the US$716 a tonne quoted for supplies from Canada, according to the China National Grain and Oils Information Centre.

China remains Canada’s largest export customer for canola in the 2012-13 crop year to date, purchasing 1.6 million tonnes as of the end of January, according to Canadian Grain Commission data. That compares with 1.2 million at the same point the previous year.

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

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