Despite Trade Tensions, Canadian Canola Prices Soar as Exporters Access Backdoor to Chinese Market
Earlier this year it appeared as if diplomatic and trade tensions between Beijing and Ottawa spelled trouble for Canada’s canola growers. However, despite these challenging market conditions, prices for Canadian canola have soared to its highest point in two years as exporters are finding alternative points of access into the Chinese market.
Since March 2019 Chinese authorities have blocked canola shipments from two major Canadian traders, after Canada detained an executive from Huawei Technologies based on a 2018 U.S. warrant.
And while direct canola purchases from Canadian traders have been affected - Chinese buyers are still buying canola oil from traders in Europe and the UAE who have significantly increased their canola purchases from Canada.
Canadian canola exports to China fell by 45 percent over the 11 months ending in June, however, total canola shipments for the country have climbed by 9 percent - driven by sales to France climbing three-fold and sales to the UAE doubling.
Global demand for canola oil is high prompting Canadian crushers, including ADM and Bunge, to accelerate production, as Canadian farmers are pre-selling their crops amid expectations of a bumper harvest.