A heart feeds in a western Canadian canola field that is in full bloom this week before it will be harvested later this summer in rural Alberta, Canada July 23, 2019. REUTERS / Todd Korol
August 9, 2020
By Rod Nickel and Hallie Gu
WINNIPEG, Manitoba / BEIJING (Reuters) – Canadian canola prices have risen to their highest in nearly two years, despite a diplomatic dispute between Ottawa and Beijing as exporters find circular ways to reach top oil sellers in China.
Chinese authorities have blocked canola shipments by two Canadian exporters since March 2019, an action they took after Canadian police arrested an executive Huawei Technologies in late 2018 on a U.S. order.
However, the dispute did not dampen China’s appetite for canola, which is mainly processed into vegetable oil. While China directly buys less from Canada, it has instead bought canola oil from Europe and the United Arab Emirates, with some of that oil made from Canadian canola, traders said.
ICE canola futures
“Profits are extravagant. Anyone who has the resources to import (canola oil) will definitely buy, ‘said a manager with a China-based canola importer.
“It’s now like golden oil.”
Canadian canola exports to China fell 45% year-on-year in the 11-month period through June, however, total canal exports jumped 9%, helped by a triple sale to France and double shipments to the UAE.
Canada is the world’s largest canola producer, and the yellow-flowering plant earned farmers C $ 8.6 billion ($ 6.42 billion) last year, the most of any crop.
China has meanwhile improved canola oil imports from Europe, Russia and Australia, with some of that oil being made from Canadian canola, said another trader from China.
The price rally led farmer Mary-Jane Duncan-Eger, who grows canola near Regina, Saskatchewan, to “super-mystify” considering Canada is on track for a bumper crop.
To secure high prices, she sold 50% of her expected harvest, up from the 30% she normally sells at this time of year.
‘I’m pretty happy. As long as someone buys it, I do not care who. ‘
Global demand for canola oil has prompted Canadian crushers – which include Archer Daniels Midland Co.
GRAPHIC: China’s Prices for Edible Oils – https://fingfx.thomsonreuters.com/gfx/ce/rlgpdnerxpo/Edible%20Oils-Aug%202020.jpg
Exporters are also selling more seed to the UAE, where crushers produce oil to sell to China, he said.
Bad weather and insect attacks in Europe have also raised prices.
Rapeseed production in the European Union and Britain is expected near the 13-year low seen in 2019.
This has led European importers to look to other countries for supplies, especially those with weaker currencies that make purchases more profitable, Consultie Strategy Grains said in a report.
“Canadian canola has the largest edge,” it said. “Competition between importing countries is likely to be fierce in the coming months.”
GRAPHIC: Canadian Canola Exports – https://graphics.reuters.com/CANADA-CANOLA/ygdpzdajjpw/
GRAPHIC: Futures prices for rapeseed oil in China – https://fingfx.thomsonreuters.com/gfx/ce/jbyprkdzqve/Rapeseed%20prices-Aug%202020.jpg
(Report by Rod Nickel in Winnipeg, Manitoba, Hallie Gu in Beijing, Gus Trompiz in Paris and Michael Hogan in Hamburg; Edited by Marguerita Choy)
