Canada looks east to China for canola demand

China could buy as much as 600,000 tonnes of canola from Canada this year and has bought 360,000 tonnes as of January 1, the chief executive of Saskatchewan Wheat Pool said on Wednesday.
China has emerged as a key market for Canadian canola, although it is seen as a price-sensitive market, Mayo Schmidt told farmers in Saskatoon, according to a copy of his written remarks.
"Unfortunately, China's annual purchases are highly variable and depend largely on their domestic oilseed supply and the availability of other competing oilseeds world-wide," Schmidt wrote in his remarks.
China's likely purchases - the projected 600,000 tonnes, plus the 360,000 that China has already bought - are slightly below the recent annual average of 1.1 million tonnes.
Schmidt said the Canadian canola industry will count on its regular buyers in Japan, the United States and Mexico, as well as on new buyers as it tries to boost seed, oil and meal exports that average C$1.5 billion ($1.2 billion) a year.
"Simply put, the canola industry is committed to achieving 7 million tonnes of consistent market demand and production by 2007," he said.
That would be up from the recent 10-year average of 6.3 million tonnes of production.
Schmidt said Pakistan was expected to purchase 400,000 tonnes this year, explaining that crop failure in Europe means that country needs to find a new source of canola, and he also hopes to break into markets in India and Iran.
India, Iran and Pakistan combined could demand between 1 and 2 million tonnes of Canadian seed annually, Schmidt said.
He said increased production of healthier strains of canola could capture demand for alternatives to hydrogenated oils in the food processing and convenience food sectors in the United States, Japan and Canada.
"High stability canola provides food processors with an option that is both low in saturated fats and has no trans-fats," Schmidt said.
"The US deep frying market is very large and canola has not been a major player, so the introduction of high stability canola offers the opportunity to increase sales in the US" Schmidt said an additional 1 million tonnes of seed will be needed to fill demand in the US food service industries.
He also said Mexico's current import levels will be expanded.