By Peter Hobson, Naveen Thukral and Mei Mei Chu

CANBERRA/SINGAPORE/BEIJING (Reuters) – Australia would likely benefit from a shift in global canola trade flows if China imposes tariffs on Canadian canola imports but must address concerns over blackleg fungus.

China, the world’s largest canola importer, has disrupted the market by launching an anti-dumping investigation into Canadian canola, creating uncertainty in the $2 billion trade between the nations.

To source canola from Australia, the second-largest exporter, China would need to revise stringent blackleg testing requirements that have blocked Australian shipments since 2020.

“China doesn’t have many options,” said Ole Houe, director of advisory services at IKON Commodities in Sydney. He noted that supplies from the EU and Ukraine are tight, and while Russia has a bigger crop, it’s insufficient for China’s needs.

China’s investigation is set to conclude by September 9 next year, but can be extended for six months. In the meantime, Chinese buyers are hesitant to sign new contracts with Canadian suppliers.

Blackleg, a fungal disease that affects canola yield, has historically hindered canola imports from both Canada and Australia. The need for strict adherence to blackleg specifications has been a sticking point in negotiations.

Despite the challenges, some analysts believe it’s plausible for China to quickly access Australian canola by modifying its import standards.

Australia is currently exploring ways to resume canola exports to China and has agreed to trial shipments designed to minimize contamination risks.

While Australian canola prices are currently higher than Canadian prices, many producers are redirecting their exports to more lucrative markets like the European Union, which values non-genetically modified canola products more highly.

In summary, despite facing blackleg import barriers, analysts suggest Australia may find new opportunities in the canola market, especially if Canadian imports cease for China.

($1 = 1.4526 Australian dollars)
($1 = 1.3480 Canadian dollars)
($1 = 0.8951 euros)