China has lifted a three-year ban on Canadian canola seed imports, with Canadian officials saying in a statement on Wednesday that it did not provide a reason for lifting the ban, but that trade could be limited due to low stocks and high prices.
China, the world’s top oilseed buyer, suspended two Canadian canola exporters in March 2019 over allegations that the shipment contained insects.
Beijing customs officials did not immediately respond to a request for comment.
China’s claim, controversial at the time by Canada, came amid political and trade tensions between the two countries following the arrest of Huawei executive Meng Wanzhou in Vancouver for extradition to the United States.
“We welcome the decision to remove the restrictions and are immediately reinstating them to allow the two companies to export Canadian canola seeds,” said Mary Ng, Minister of Commerce of Canada, and Mary-Claude Vibeau, Minister of Agriculture, in a statement.
Canola has low reserves, which are crushed into food for animal feed and oil for cooking, but is expected to block the flow of oilseeds into China.
Canada, the world’s largest canola producer and exporter, produced its smallest canola crop in 13 years in 1321, pushing buyers to look elsewhere for supply and supporting record edible oil prices worldwide.
“This will improve the current deficit of rapeseed internally. China’s two main import sources for rapeseed are Canada and Russia, and there is now a huge supply risk for Russia, “said Kong Linky, an analyst at Haitong Futures.
“There should be some trade flows with the lifting of sanctions, but imports are not expected to be large because Canada’s canola inventory is not high this season,” he said. Maybe there will be more imports after September, ”he added, as new Canadian crops hit the market.
Johnny Huang, co-founder of Sitonia Consulting, said China’s own canola crop could also slow down the flow of trade.
“China is expected to produce a record amount of canola this year. Soybean production is expected to increase this year, ”said Huang.
Global edible oil prices, from palm oil to soybean oil, have reached milestone heights this year due to tight supply as production has declined and key producers have blocked shipments.
(Reporting by Eric Beach, Emily Chow in Kuala Lumpur and Haley Gu in Beijing; Editing by Tim Ahman, Margurita Choy and Kenneth Maxwell)