China has lifted a ban on imports of Canadian canola that has been in place since May 2019, when $2 billion worth of trade was put to an abrupt stop.
The agreement to resume the imports was reached between Canada’s farm ministry and China’s customs administration during a call on Tuesday, according to Financial Post.
The change was made as oilseed processors in China see the lowest soybean stocks since roughly 2010 and the supply chain transporting farm produce is heavily disrupted by the global coronavirus pandemic.
Canada is the top supplier of canola in the world—a product used for protein-rich animal feed.
The 2019 ban came as tensions were running high between Beijing and Ottawa, though Beijing said that it was a result of quality issues. The tensions arose after Canada detained Huawei Technologies Chief Financial Officer Meng Wanzhou.
It was also agreed by each country that canola shipments contain less than one percent of foreign materials.
“The market is worried about oilseed supplies. And there is no energy left for any (trade) fights now,” said a source working with a large agricultural products importer.
There was $2.7 billion of canola seed exported to China in 2018 which made up roughly 40 percent of canola exports from Canada.
Inventories of Canadian canola jumped to the highest they ever have in 2019 after the ban was implemented by Beijing.
“Even though they had a conference call, I am not sure whether the trade channel has really become smooth again. We will need to try and see,” said a source with a southern China importer.
A standard on foreign materials was in effect before the ban though it was not strictly adhered to, according to buyers.
“If the standard on foreign materials is implemented strictly, it will surely take longer to offload the canola cargoes that arrive,” noted a manager who works with a Chinese crusher that crushed Canadian rapeseed prior to the ban.
He also to Financial Post that shipment standards would be tough to meet unless Canada’s inspections were made much more thorough.