China was a prolific buyer of Canadian canola during the first three months of 2011-12 and is about to develop an even bigger appetite, according to industry officials.
Canadian canola sales to China were up 127 per cent over the first quarter of last year. In fact, Canada sold more than half of 2010's total shipments of 916,800 tonnes in the first three months of 2011.
In November, Viterra's jointly owned 680,000 tonne crush plant opened in the southern Chinese province of Guangxi. "In its simplest form, it's more opportunity for us to move seed into that marketplace. Obviously that's a good thing," said Cory McArthur, vice-president of market development with the Canola Council of Canada.
The Viterra plant gives Canada a sixth approved delivery destination into China. Those six plants can process 2.8 million tonnes of canola, which is the most Canada has ever shipped there.
Chuck Penner, an analyst with Left-Field Commodity Research, doesn't agree there will be an uptick in demand associated with Viterra's grand opening because China already has plenty of crushing capacity. "I don't think there is a bottleneck there right now that needs to be relieved," he said.
Penner also said Viterra could fuel its plant with Australian canola. Growers there are expected to harvest 2.6 million tonnes of canola, up from 2.2 million last year.
"That will be a bit of a competitor even in the next few months, so we might see [Canadian exports] slow down a bit," he said.
But it doesn't look like there will be much of a reduction in sales for the rest of the year based on comments made by the China National Grain and Oils Information Centre, which expects canola imports to hit 1.8 million tonnes, up 41 per cent from the 1.2 million tonnes imported last year.
McArthur said that is simply a function of the rapidly expanding Chinese middle class. He adds that India could some day rival China as a major buyer of Canadian canola. "We just need to start creating a little bit of a groundswell of demand and hopefully we'll start to see the numbers go up," he said.
– Western Producer
from Western Investor January 2012
