Embargo on Canadian canola oil may threaten grain movement

The Canola Council of Canada says canola oil and meal sales are still being executed in China, but a former federal agriculture minister says otherwise.

Gerry Ritz has spoken to an official with one of Canada’s major crushers who told him they can’t unload a tanker full of oil.

“A boatload of oil arrived at the dock to be unloaded and samples were taken and they were told, go back out and anchor and we’ll call you when we’re done,” he said.

“That was a couple of weeks ago.”

The exporter is paying $30,000 a day in demurrage fees.

“We used to call this the Korean inspection. They hold everything at the dock until it’s worthless and then say, ‘OK, it’s good,’ ” said Ritz.

Brian Innes, president of the Canadian Agri-Food Trade Alliance and vice-president of public affairs with the Canola Council of Canada, could not confirm Ritz’s report.

“In terms of oil and meal, to our knowledge all business to China continues to be executed,” he said in an email.

Wade Sobkowich, executive director of the Western Grain Elevator Association, has also heard nothing of the incident.

“I’m personally not aware of this impacting oil at this point,” he said.

Ritz said China’s unloading delay tactics are retribution for Canada detaining Huawei executive Meng Wanzhou.

“It’s pure politics. There is no doubt about it,” he said. “I mean, there are no pests in oil that they could claim.”

Ritz said basis levels will be hurt now that oil is backing up in the system as well as seed. He also worries what impact the canola mess will have on other grains, oilseeds and pulses.

“How much canola have we got in the system?” he wondered.

If canola is sitting in inland or export terminals, that will affect the delivery of other crops.

“We’re just coming on to road bans, we’re just coming on to seeding. A lot of guys want to move some product,” said Ritz.

“If you’ve got all of this in the pipeline and can’t move other stuff around it, there’s a chill that goes onto other products.”

Sobkowich said the grain-handling system is not being plugged by stranded canola.

“The canola that’s in the system is going to find a home and it’s moving through,” he said.

“If there is a place where canola is going to be held, it is likely to be on-farm because of the prices,” he said.

Analysts are forecasting between 3.5 and four million tonnes of canola carryout, which at the high end would be about one million tonnes more than the previous record.

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