Canada Markets

Canada's Cumulative Canola Exports to China as of May

Cliff Jamieson
By  Cliff Jamieson , Canadian Grains Analyst
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This chart highlights the year-over-year change Canada's canola exports by country in the August through May period, highlighting the growing challenge Canada faces to replace lost sales to China. (DTN graphic by Cliff Jamieson)

Canada's relations with China seem to be growing colder as time wears on. Chinese jets recently buzzed a Canadian warship in the East China Sea, and the Globe and Mail has reported this week that Michael Kovrig, one of two Canadians imprisoned in Canada, not only faces isolation and 24-hour light but has now had his reading glasses confiscated. Pressure remains on Canada's government to take a new and tougher approach on relations with China.

The Canadian Grain Commission's Exports of Canadian Grain and Wheat Flour report for May indicates how quickly Canada's canola exports will fall behind without the benefit of movement to the world's second-largest economy. May data shows 112,000 metric tons (mt) of canola exported to China, down from 542,300 mt shipped in the same month of 2018. The Global Times reported on July 1 that a vessel carrying Canadian canola left Vancouver on May 7 and has since spent four weeks circling the East China Sea, pending approval to unload.

The CGC's cumulative data through the month of March (August through March) shows movement to China up 290,700 mt from the 2017-18 crop year, due largely to aggressive movement earlier in the crop year. This cumulative volume was reported down 130,400 mt from last crop year as of the end of April. As seen on the attached chart, this is down 560,800 mt by the end of May. Canada's total exports for the 10 months ending May are reported at 7.8575 million metric tons, down 896,000 mt or 10.2% from the previous crop year. May exports were reported at 817,500 mt, a bounce from the 641,100 mt shipped in April and the largest monthly volume shipped since December.

For several reasons, including lack of crush capacity, industry officials have stated that replacing lost demand from China will be difficult. The CGC's cumulative data for May shows business conducted with five countries so far this crop year where no shipments were made in the previous crop year. This list includes Belgium, India, Israel, Qatar and Colombia. The problem lies with the volume, which totals only 156,700 mt.

Of the countries where shipments have been made in both 2017-18 and 2018-19, volumes have increased to Germany (43,900 mt) and to Bangladesh (127,300 mt), with the year-over-year change in brackets. Of the countries where shipments have been made in both crop years (excluding China), movement has declined year over year in eight countries, with the total decline in volume totaling 663,000 mt; the largest year-over-year drop is reported at 223,800 mt representing shipments to Mexico.

Assuming volumes moved to China will continue to slow, or even stop, the year-over-year change is set to grow quickly. In 2017-18, Canada shipped 820,010 mt to China in the months of June and July, while the three-year average is 756,637 for these two months.

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Cliff Jamieson can be reached at cliff.jamieson@dtn.com

Follow him on Twitter @Cliff Jamieson

(AG)

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