April trade figures show China has hurt canola exports

We are starting to get numbers on how several issues are affecting Canada-China trade now that Statistics Canada released the April trade numbers.

That was the month when China’s restrictions on imports of Canadian canola fully hit home. It was also the month when China’s problems with African swine fever really began to affect its imports of pork.

As I have written before, China’s canola imports through most of the crop year were booming. In the October to December quarter of 2018 it imported almost 1.5 million tonnes of the oilseed, an increase of more than 50 percent over the same period in 2017.

January’s exports were also strong at 255,200 tonnes but then started to taper off in February and March with 185,200 and 189,600 tonnes, respectively.

In April things came to a screeching stop with zero exports to China.

This was a serious blow, but the impact was partially offset, as expected, by Pakistan increasing its buying.

Pakistan is a cost conscious buyer and usually steps in only when canola prices drop.

In April, it imported 161,600 tonnes, compared to a monthly average of about 42,000 in the previous three months.

France and Belgium also stepped in with each taking close to 20,000 tonnes in April.

Japan, Mexico, the United States and United Arab Emirates, all significant buyers, had about normal purchases in April, but for the crop year Mexico and the United Arab Emirates are well behind where they were a year ago at this time.

There is no denying that there is a huge hole in the market without China.

The total canola exports in April were 534,100 tonnes. In the same month last year exports were 926,030 tonnes and in 2017, 972,300.

To get May export numbers we must turn to the Canadian Grain Commission. It shows that in the four weeks May 6 to June 2, Canada shipped 702,000 tonnes of canola. In roughly the same period last year, it exported 805,000 tonnes.

Last week federal Minister of International Trade Diversification Jim Carr, accompanied by Alberta Trade Minister Tanya Fir and Saskatchewan Trade Minister Jeremy Harrison, was in Japan and South Korea to try to drum up new business. While Japan has long been the second largest market for Canadian canola, South Korea buys little. But it will be difficult to replace the volume that China buys.

Comments Prime Minister Justin Trudeau made last week about meeting personally with China president Xi Jinping during the G20 meeting in Japan late this month are hopeful. China has flatly rebuffed Canadian efforts to set up meetings to discuss the canola issue and the arrest and detention of two Canadians in apparent retaliation for Canada’s arrest of Hauwei Technologies executive Meng Wanzhou to comply with a U.S. extradition request.

Turning to meat, exports to China were booming, at least to the end of April.

If the recent news about increased inspections leads to reduced imports, it would be a blow to the Canadian livestock industry, which has great hopes for the current year.

African swine fever in China is causing huge culling of the domestic herd, leading to expectations that the Asian giant will imports vast amounts of meat.

It is already happening. China’s pork imports from Canada in the first four months increased 53 percent by volume to 146,188 tonnes. By dollar value they increased almost 80 percent to $310.2 million.

By weight it is the second-largest buyer of Canadian pork, behind the U.S. and ahead of Japan and by dollar value it is the third, behind the U.S. and Japan.

By comparison, the European Union exported 454,216 tonnes of pork to China in the first three months, an increase of 26 percent over the same period last year. To the end of May the U.S. has exported only 80,000 tonnes, up from 20,000 last year but has additional outstanding sales of 171,500. China has tariffs on U.S. pork.

While Canada’s pork exports to China soared, movement to the United States dipped. Overall pork exports to all destinations in the first four months totalled 433,360 tonnes, an increase of 3.6 percent. China’s beef imports are small compared to pork, but Canada’s shipment increase compared to last year is astounding.

China in the first four months imported 7,667 tonnes of Canadian beef, an increase of 388 percent. That was worth $63.6 million, an increase of 344 percent.

Hong Kong’s beef imports are tracked separately from China. If you put Hong Kong and China together they have imported $115.4 million worth of Canadian beef, edging out Japan as the number two buyer.

The U.S. remains the dominant Canadian beef importer at $743 million in the first four months.

Shipments to the U.S., Japan, China and South Korea are all doing well this year, pushing the total amount of Canadian beef exported in the four months to 140,802 tonnes, an increase of almost 20 percent.

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