There are government-to-government negotiations but no settlement in the dispute between Canada and China over the latter’s new, more stringent canola dockage rules as I write this column March 28.
As we reported last week, there are rumours in the Canadian trade that China might agree to delay implementing the new standards, which China says it needs to protect its growers from accidental importation of material carrying blackleg fungus.
The new maximum allowable limit is one percent dockage, down from the current limit of 2.5 percent.
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Strong canola exports expected to tighten supply
Canola exports will end up the third strongest in the past 10 years, according to recent Canadian Grain Commission weekly export data.
The weekly export numbers from the Canadian Grain Commission indicate exporters appear to have some confidence that things will turn out OK. And generally the spring grain and oilseed shipping season looks strong, judging from the vessel line up of 30 ships at Vancouver, versus the 12-month average of 18 vessels.
In week 33 of the crop year, which ended March 20, canola exports to all destinations were 261,800 tonnes, up from 171,900 tonnes the week before and only 47,700 tonne in the week immediately following China’s announcement.
Canola shipped on March 20 would have a hard time travelling to China and being unloaded before April 1 when the new dockage rule kicks in, so exporters appear confident that China won’t reject cargoes out of hand.
The weekly CGC numbers do not list where the crop exports go so it is not a sure thing that the export surge in week 33 was all due to movement to China.
However, China to the end of February had taken 2.18 million tonnes or 38 percent of Canada’s canola exports, monthly CGC figures show. Last year at the same point it had taken 42 percent of exports.
The number two importer is Japan. It took 1.29 million tonnes, down slightly from last year. The number three importer was Mexico at 701,000, which was also down a little from last year
However, total exports are running at a record pace, 21 percent ahead of last year due to much improved shipments to several second-tier buyers.
Pakistan had bought 510,000 tonnes, up from 128,500 last year at this time. Shipments to the United Arab Emirates were also strong at 453,900 tonnes, up from 268,600 last year.
And a total of 328,600 tonnes had gone to various European countries compared to zero shipments last year. This amount is already a record high shipment to Europe and there are still four months in the crop year.
The boom in European demand reflects the fact that the EU’s rapeseed crop was short of the bloc’s demand in 2015.
It produced only 22 million tonnes in 2015, down from 24.3 million in 2014.
European production in 2016 is not expected to increase much and its neighbour, Ukraine, had a dry fall seeding season with canola area falling by almost a quarter to 1.6 million acres.
So this means there is potential for good exports to Europe again in the 2016-17 marketing year.
The other component in canola demand is the Canadian domestic crush and it too is record large.
The weekly canola crush to March 23 slipped back from the previous week’s record performance to a respectable 172,614 tonnes, or 83.6 percent of capacity, still topping the year-to-date level of 82.5 percent.
The crush for the year is running 12.6 percent ahead of last year at the same point.
