Chinese importers have stopped buying Canadian canola seed: Industry group

Canola seed exporters say Chinese importers are currently unwilling to purchase their product

Canola seed exporters report Chinese companies — one of their major markets — have stopped buying their product, according to an industry group.

The ongoing trade dispute that started earlier this month when China revoked the permit of a major Canadian exporter is also causing woes for canola farmers, grappling with lower prices and delayed shipments.

Canola seed exporters have told the Canola Council of Canada that Chinese importers are currently unwilling to purchase their product, the group said in a statement released Thursday. Companies that are members of the council include Viterra Inc., Louis Dreyfus Company, Cargill Ltd. and Parrish & Heimbecker Ltd.

The reports come weeks after China’s foreign ministry blocked imports from one of Canada’s largest grain producers, Richardson International Ltd., citing fears of insect infestation.

At the time, some suggested the move was retaliation for Canada’s arrest of a top Chinese tech executive. In December, Canadian authorities arrested Huawei Technologies Co. Inc. senior executive Meng Wanzhou in Vancouver at the behest of the United States.

There was some initial optimism that Chinese concerns with canola trade could be resolved quickly, the industry group said, and it’s disappointed that did not happen.

Canada exports about 40 per cent of its canola seed, oil and meal to China with canola seed exports to the country being worth $2.7 billion in 2018, according to the council.

“Under the circumstances, Canadian canola seed exporters who normally ship to China have no alternative but to supply customers in other countries who value high quality Canadian canola,” said Jim Everson, the council’s president, in a statement.

It has also created problems for farmers.

David Reid, 42, is a partner at the family farm he grew up on in Cremona, Alta. — about 90 kilometres northwest of Calgary. Canola accounts for about 30 per cent of what the farm produces now.

The farm sells to a company that exports the product to other places, like China, but after Richardson’s permit was revoked Reid said shipments slowed and he saw an immediate price drop for his product.

Prices fell by a dollar a bushel, he said, which he estimated to be a 12 per cent fall.

The price of the commodity also fell in futures contract trading since Wanzhou’s arrest. The May canola futures contract was trading at $458.30 per tonne Friday afternoon — down nearly 2.2 per cent.

Reid is now holding on to more of his product in hopes the price will rise.

“We don’t know how long we might have to wait for the price to increase,” he said, adding that while it’s possible to store the product for a long time, bin space will become an issue by the fall when he’ll need the space for the next canola crop.

He has already sold some product at the lower price, which hurts his bottom line.

“Everybody’s feeling it for sure,” he said of other canola farmers he knows.

Aleksandra Sagan, The Canadian Press

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