Western Canada is reaping the benefits of China’s large appetite for wheat and canola.
Manitoba has watched its agricultural exports to China surge this year beyond anything seen in the past decade, due largely to exports of wheat and canola seed.
Saskatchewan is also enjoying buoyant Chinese demand for wheat, barley and canola oil and seed. Alberta will see its best exports to China since 2001.
But China is a fickle market and no one knows whether the climb in demand is a blip or the start of a longer term trend.
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“I don’t think anybody knows what China’s purchases are going to be,” said Peter Watts, a Canadian Wheat Board market analyst. “That’s very difficult to predict.”
Watts said China reduced subsidies to its wheat growers in the late 1990s, prompting reduced production and falling wheat stocks over the past four years.
China started buying wheat in a big way last year, sending signals that it might take as much as 10 million tonnes, mainly from Canada, the United States, Australia and the European Union. Some of those sales have carried over into this crop year.
China could become the world’s next economic powerhouse. Outside observers see a country with an increasingly affluent consumer base, especially in urban centres.
Watts said the U.S. Department of Agriculture has estimated Chinese wheat production of about 90 million tonnes this year will again fall short of consumption, estimated at about 102 million tonnes.
That will force China to either allow its wheat stocks to be drawn down further or it will have to import.
Meanwhile, China remains the world’s largest consumer of vegetable oils, such as soybeans and canola.
Canadian exports of canola seed to China have had a hard time topping 50,000 tonnes in the past few years, but they could surge to more than 400,000 tonnes this year, said Dave Hickling, vice-president of canola use for the Canola Council of Canada.
China tends to go with the crop that provides it with the cheapest source of vegetable oil. Although it is drawing in more soybeans this year, it also is looking for canola to help satisfy its vegetable oil needs.
Although it appears Chinese demand for canola oil and seed will continue, Hickling said no one can bank on that.
“They’re in the market one day and out the next.”
The council is working to develop more recognition in China of the unique qualities of canola oil. Negotiations also continue to lower China’s import tariffs on canola to three percent from nine percent, putting them on par with those for soybeans.
Despite the hefty increase in agricultural exports from the Canadian Prairies to China in the first nine months of this year, they remain well below levels seen a decade ago.
In 1994-95 and 1995-96, China bought approximately10 million tonnes of wheat from Canada.
