Will China Re-Engage Australian Canola?  

China is expected to produce 15.6 MMT of canola (representing 18% of the global crop) , but will consume nearly 20 MMT (representing 22% of global consumption), making it one of the largest importers of canola.

USDA expects China to import 3.4 MMT for the 24/25 marketing year, down from 4.9 MMT in the 2023/24 marketing year, of which 4.6 MMT was supplied by Canada.  

Recent developments have raised concerns for Canadian canola exporters, particularly due to an anti-dumping investigation launched by China into Canadian canola (tit for tat over Canada’s plans to impose a 100% tariff on Chinese manufactured EVs?).

This investigation is assessing whether Canadian canola is being sold at below market value, which could lead to the imposition of tariffs on imports from Canada. The canola trade between Canada (the world’s largest canola exporter) and China is worth about $2 billion pa. 

If tariffs are implemented, Canadian canola would become uncompetitive into the Chinese market. In contrast, Australia growers could potentially stand to benefit from this situation. If Canadian canola becomes more expensive due to tariffs, Chinese buyers may turn to Australian canola as an alternative. Australia already has a strong foothold in the Asian markets and may enhance its exports to China, filling the gap left by Canadian products.

Overall, the outcome of the anti-dumping investigation will be crucial in shaping the dynamics of the canola market, potentially altering trade flows and market shares between Canada and Australia in the Chinese market.

Australia’s canola exports to China have been hindered since 2020 due to China’s ban related to the detection of blackleg disease in Australian canola shipments. Blackleg can cause significant yield losses and poses a biosecurity threat, leading China to impose strict import restrictions to protect its agricultural sector. These restrictions led to increased competition among other exporters, like Canada and Ukraine.

By addressing the blackleg issue and improving trade relations, Australia could regain access to the Chinese market, benefiting its canola exporters and the agricultural economy.