Canola futures stages their biggest rise in 14 months after China stepped back from implementing curbs on imports of the oilseed from Canada, despite restating concerns over disease threats from the shipments.
Canola futures for November soared 3.4% at one point to Can$468.50 a tonne in Winnipeg, the biggest jump for a spot contract since June last year.
The contract eased back to Can$463.90 in mid-morning trade, a rise of 2.4% on the day.
The gains followed China’s decision to delay from Thursday the introduction of tighter curbs on imports of Canadian canola, and cutting to 1%, from 2.5%, the allowable level of “dockage” – that is, the proportion of foreign material in cargos.
China’s premier, Li Keqiang – speaking during a visit to the country by Canada’s president, Justin Trudeau – said that “we have agreed to extend the current regime and at the same time the relevant authorities will be in close touch to work out mutually acceptable ways to resolve this issue.
“We believe both sides will be able to make some mutual adjustments, with the larger picture of China-Canada trade and ties in mind.”
However, Mr Li underlined the concerns to Chinese canola producers over importing disease from Canadian shipments of the rapeseed variant.
“It’s also true that Chinese canola producers have their own worries, hoping that imported canola will not carry with it any disease. Chinese consumers also have that issue on their mind,” he said.
‘Most valuable export’
The fears centre on so-called blackleg,a fungal disease which the Canola Council of Canada says “can cause significant yield losses in susceptible varieties”, and can affect related plants such as sprouts and broccoli too.
The council said on Wednesday it has “invested millions of dollars in blackleg research” since 2009, when fears for disease prompted a previous Chinese band on canola imports from Canada.
“As a result of this investment, research has shown that reducing the incidence of blackleg in Canada will benefit both countries.”
The council added that “a science-based solution is in sight” to the dispute over “Canada’s most valuable export to China”, worth Can$2.0bn last year.
Indeed, China is a particularly important market for canola shipments from Canada, accounting for 3.8m tonnes of the oilseed last year.
The threat to this trade – representing 40% of canola shipments from Canada, the top exporter– have been a major worry for the North American country’s producers who rely on the oilseed for one-quarter of all farm cash receipts.
China’s concession follows a disappointing domestic harvest, which fell 15.2% to 12.6m tonnes this year, according to the International Grains Council.
The impact will be reflected in a 1.8m-tonne drop to 17.1m tonnes in Chinese consumption in 2016-17, with weaker harvests in major exporters Canada and Ukraine, as well in top producer the European Union, making import supplies harder to come by.
Stocks of canola and rapeseed in major exporting countries are seen ending 2016-17 at a little over 1m tonnes, the lowest in at least a decade, on IGC data.
(Source – http://www.agrimoney.com/news/canola-prices-jump-after-china-delays-curbs-on-canadian-cargos–9884.html)