China Agriculture View

BEIJING, Oct 23 – Chinese buyers have cancelled at least two cargoes of Canadian canola for November and December shipment on worries that government authorities may hold cargoes over blackleg disease, one industry source said on Friday.

Canada is the world’s biggest exporter of canola, crushed for oil used in the vegetable oil and biofuel markets. China was Canada’s top canola seed importer last year, buying 2.8 million tonnes, though it is an inconsistent buyer year to year.

But Chinese authorities have told Canada they will not accept canola seed from Nov.15 without a certificate showing it is free of blackleg. The restriction covers canola seed used in oil and meal processing, but not seed meant for replanting.

“Some buyers learned the problem last week and have washed out two cargoes,” said the source, who declined to be identified.

ICE Canada November canola closed down 4 percent on Thursday with traders saying the news led to the drop.

Blackleg can reduce yield or kill plants. It is common in Canada canola seed, but is also present in much of the world, including China, so it should not be regulated, the chief of the Canola Council of Canada, JoAnne Buth, said in an interview.

“There should not be this kind of stringent requirements for something that’s going for processing,” Buth said. “It doesn’t seem legitimate.”

More cancellations could happen as the disease is common in Canadian canola crop. Chinese buyers have already booked more than 1 million tonnes of new canola crop from Canada, said one trader with an international trading house in China.

Traders said the move would stop imports completely. Chinese buyers said they did not dare to book more new cargoes.

Two Chinese buyers told Reuters they were not clear whether the date referred to was the loading date in Canada or the cargoes’ arrival date.

Chinese quarantine authorities have not informed buyers in China and could not be reached immediately for comment.

“Some cargoes cannot be washed out, who will take them? We would see how authorities tighten inspection,” said one Chinese buyer.

The move came as Chinese farmers plant rapeseed, a crop Beijing has been buying for state reserves from farmers over the past two years to try to shore up prices.

But cheap imports had pressured domestic prices of the cooking oil, popular in the country’s south.

The news has driven up domstic prices of rapeseed oil futures, with Zhengzhou prices rising 2 percent in morning trade.

China’s rapeseed imports jumped 265 percent in the first eight months of this year to 2.19 million tonnes, after a previous record year high.

At the same time, China’s record harvest prompted the government to build large rapeseed oil reserves to support domestic prices.