China could halt all imports of Canadian canola seed

China could halt all imports of Canadian canola seed within five months, but an oilseeds analyst said on Friday that favourable economics bode well for boosting exports to the country in the longer term. China said last year it would require Canadian canola shipments to bear certificates guaranteeing the absence of blackleg disease, which is common in Canada.
But allowed a transition period through the 2009/10 crop year, which ends July 31. In the meantime, China has allowed Canadian exporters to ship blackleg canola only to certain ports located away from domestic rapeseed-growing areas.
The restriction has limited volumes to last year's top seed export market. Government guarantees of minimum prices for China's farmers have kept Chinese rapeseed prices higher than market prices for imported canola and rapeseed, said David Jackson, head of oilseeds research at Oxford, England-based LMC International. As a result, it's more profitable for Chinese crushers to process imported seed, a gap that has caused the government to subsidise crushers to use the domestic crop. The subsidies have helped Chinese farmers but created an unwieldy stockpile of rapeseed and canola, Jackson said at a Canola Council of Canada conference in San Francisco. The stockpile is thought by Canadian officials to be the real reason for Chinese restrictions.
"(Restricted access) is a temporary situation caused by Chinese policy, it's not a swing in demand," Jackson said. Demand growth for canola in urban China is enough to provide markets for both Chinese farmers and imports, he said. "If you want to grow (sales) in China, you can't displace local production," Jackson said.
"Longer term, sustainable growth is available in China for Canadian canola." It's uncertain, however, when or if China will lift restrictions against Canada, said JoAnne Buth, president of the Canola Council.
"It's a total unknown right now where we are headed with this," she said on the conference sidelines. At the least, the industry is looking for successful negotiations to extend the transition period. The council will conduct monitoring and surveying this year to establish where the two types of blackleg disease are located in Western Canada, after the Chinese asked whether Canada could establish pest-free zones for canola. "We think that's likely impossible," Buth said. China has expressed concerns about crop contamination, but Canadian officials say the restrictions are to allow China to winnow down its canola stockpile.
China imported a significant amount of Canadian canola from the 2009/10 crop year before imposing the restrictions in November 2009, a factor that reduced some of the trade barrier's impact on ICE canola futures. But without a change in China's stance, that pressure could bear down on futures prices this summer, depending on how the new crop fares, Buth said. Most industry officials expect Canadian farmers to plant a large to record-large canola acreage this spring.