Futures plunge as China greenlights Canada rapeseed imports

China is close to ending a year-long blockade of rapeseed imports from Canada as the world’s most populous country attempts to diversify its food supply amid the ongoing Covid-19 coronavirus pandemic, several trade sources have told Agricensus.

A Chinese authority was said to have granted market access to several Canadian rapeseed exporters after the suspension was imposed in March 2019 amid a deterioration in trade relations between the two countries.

“It confirmed that Canadian rapeseed can be imported as long as the impurities are within 1%,” according to one unofficial statement forwarded by a trade source at a Canadian agricultural exporter.

The statement said that the decision was made after a conference call between Chinese Customs and the Canadian Ministry of Agriculture and Agri-Food on Tuesday.

However, the statement neither suggested the duration of the decision's validity nor did it clarify whether the suspended companies will be allowed to export.

Sources at both the China Customs and the Canadian government could not be reached at time of publication, but three trade sources in the rapeseed industry validated the information with Agricensus.

China shut access to Canadian rapeseed as trade tensions between the two countries escalated after the arrest and extradition of the CFO of China’s tech-major Huawei from Canada to the US.

The Chinese government revoked the right to export from three major Canadian rapeseed exporting companies, including Richardson International and Viterra between March and April 2019, prompting trade volumes to fall drastically.

Canada was the largest rapeseed exporter to China with an annual trade volume of 4.5 million mt before the suspension, but the volume fell to 2.3 million mt last year according to China Customs data.

Futures for both the rapeseed complex and the soybean complex in China reacted strongly to the news, with rapeseed meal and oil futures on Zhengzhou Commodity Exchange falling 1-3% across the board and soymeal and soyoil futures on Dalian Commodity Exchange down by the same magnitude.

China is looking for alternative sources of oilseeds as the coronavirus pandemic poses a threat to supply stability in its two major supply sources – Brazil and the US – which provide around 90% of China’s total soybean imports.