Canola Exports to be Affected by China’s Market Crash
The effects of an 8.5% drop in the country’s main index on August 24, which is leading many to refer to the day as “Black Monday”, will likely be felt by the Canadian canola sector.
Although Canadian canola crushers did well a year ago, things are looking very different as the industry moves toward 2016, and industry insiders forecast that crushing plants will be reticent in their forward purchasing.
“The crushers here are going to be losing lots of money because the global vegetable oil market has really tanked,” said Errol Anderson of ProMarket Communications located in Calgary.
When China devalued their currency, all of the country’s trading partners in the region were affected, leading Anderson to say that other countries, such as Japan, will also likely be buying less canola. And although Statistics Canada estimates a smaller Canadian canola crop than last year, lower production is expected to have little impact on the overall hit the industry will take.