China’s canola meal supply may fall under tighter standards

Beijing | Reuters — China may suffer a shortage of canola meal, a protein-rich feed ingredient, after Beijing plans to toughen the import standards for the oilseed from major exporters, industry analysts said.

China will allow no more than one per cent of foreign material in canola shipments starting April 1, the country’s quarantine agency said last month. The higher standard may be costly for Canadian exporters, resulting in the country taking a more cautious approach to selling canola to China.

Canada is China’s largest supplier of the oilseed. Industry participants have speculated that the higher standard is part of a plan to reduce China’s large canola oil stockpiles by reducing seed imports rather than because of concerns about the transmission of the blackleg fungus.

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Expectations of low canola oilseed imports coupled with a big drop in the domestic harvest means China may have to increase imports of canola meal this year to meet the needs of the fish-farming sector, the three analysts said.

“There will be a shortage of canola meal at home. Feed mills may have to increase imports whenever prices are favourable,” said one industry analyst with an official think-tank.

Chinese feed mills consume about 11 million tonnes of canola meal a year and soymeal has already replaced the use of canola meal to a large extent since 2015. The replacement would continue this year and that would cap the growth of imports, the analysts said.

But for fish farming, canola meal can not be replaced fully, they said.

“But imports would not return to the 2011 level, though there could be a short-term spike during the peak consuming season” from May to August, said Xu Aixia, an analyst with Everbright Futures.

China imported a record 1.38 million tonnes of canola meal in 2011 after Beijing banned canola imports from Canada due to fungal disease in 2009.

Canola is crushed into meal and edible oil.

Beijing has been selling its sizeable state rapeseed oil reserves, equivalent to about one year of consumption.

The government last week sold 93,041 tonnes at an average price of 5,335 yuan (C$1,092) per tonne, slightly lower than last week’s sale of 105,488 tonnes. The sale brought the government’s total sales to 625,000 tonnes since December when inventory sales restarted.

Reporting for Reuters by Niu Shuping in Beijing.

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