Day 2 – Check out Ed’s most recent blog post from the Canola Council of Canada’s annual conference in San Diego – Check out Ed’s video of his conversation with the SciBabe.
Perfectly timed, the zeitgeist has thrown two major news items in front of the canola industry right in time for the Canola Council of Canada’s annual convention.
China is threatening to block canola shipments unless they contain less than one percent dockage, which could disrupt a market that has become Canada’s number one buyer.
Dow Agro Sciences is releasing new varieties of high-protein canola that produce meal that it says is just as good as soybean meal, removing a major weakness to the canola seed’s value and removing an impediment to a product that has been getting glutted within North America.
(To follow the convention as it unfolds, follow me on Twitter at @EdWhiteMarkets)
The Dow announcement is the kind of news everyone here down in San Diego enjoys having before them during a convention. The China announcement is a much less pleasant development, throwing a wild card into all market-related discussions in the two-day speaker program.
China’s announcement is a much more immediate situation. Its version of the CFIA informed our CFIA about 10 days ago that by April 1 canola shipments need to contain less than one percent dockage, which is a much tighter standard than the present 2.5 percent, or they could be rejected. That’s a nightmare for an exporter, because China has become a huge market, buying millions of tonnes per year of Canadian canola, but shipping a cargo there with such a low tolerance will now bring a huge risk of a costly rejection if somehow the one percent tolerance is exceeded. One percent is a heck of a lot better than the zero tolerance for GMOs that ruined most of the European market for Canadian flax, but it’s a real hurdle.
Will this shut down Canadian canola sales to China? Will it slow and reduce them? Will it add costly extra cleaning and testing of Canadian canola within Canada, which comes straight off farmer returns? I’m hoping to hear about that here. (It’ll also be interesting to hear if anyone wants to guess why China is really doing this. We still don’t actually know why China earlier threw up its obstacles to Canadian canola seed over alleged blackleg concern, as it is also doing here. If you remember that situation, which still continues, canola seed imports were restricted to certain Chinese crushers, narrowing the market there. Is this truly a fear of blackleg, or is it just a way to manipulate its domestic market? What is China really doing here?)
Dow’s announcement is happier news, offering canola growers and the canola industry hopes that the crop’s Achilles Heel might be finally removed with meal quality that can make it equally valuable to livestock feeders. Dow AgroScience has developed what it calls the “ProPound” trait which it is going to add to Nexera varieties. It greatly increases canola meal’s protein levels (from about 37 percent to 44) and reduces the digestibility problems that often restricted canola meal to the dairy cow market, except for tiny amounts that could be added into complex rations for other animals. With Canada’s canola crushing industry doubling in size in recent years, a serious problem has been developing in getting rid of the meal. If this new canola meal is as good as it’s billed, that glut concern could diminish or disappear.
This development isn’t nearly as “now” as the China announcement, because the new canola will only gradually be moved out in the market, with only small amounts available this year. The company says new Roundup Ready and Clearfield Nexera varieties will be available in 2017. But it’s good and happy news for the canola industry and I’m sure it’ll come up during the program. It’s the kind of thing that could help the council hit its goal of average yields of 52 bushels per acre by 2025.
This is the council’s 49th convention, which makes the event one year younger than me. I, however, stopped growing about 38 years ago. The canola industry, which the council represents, has kept growing and doubling over the years at a rate that is stunning if you ever stand back and look at its history. It’s now a giant commodity on the Canadian Prairies. It’s a crop and industry that has operated at the cutting edge of scientific advancement, market development, world trade and free market development. There’s always something interesting happening in canola, and with China and Dow throwing new situations at the industry this week, 2016 is no exception to that reality. I’m looking forward to hearing all about it down here in warm and hazy San Diego.