Source: Oleoscope (Russia)
China has contracted for its first shipment of Australian canola in five years, signaling a significant shift in trade relations. Indeed, this move marks a resumption of agricultural trade between the two countries. Canola is a major crop, and demand for Australian canola to China is significant.
Trade Thaws: The Canola Deal
After a five-year hiatus, a Chinese buyer has booked an Australian canola cargo. Furthermore, the booking occurred for shipment in April/May, according to traders. The price is estimated at around $515-$520 a tonne, Cost and Freight included (CFR). This signifies a warming of trade ties, after strained relations impacted agricultural imports. This is a positive step for the agricultural industry.
Background of the Trade Dispute
Australia’s canola exports to China faced challenges. Back in 2019, China imposed restrictions on Australian canola seed imports. Therefore, the action followed claims of pest detection. Relations between the two nations had deteriorated, impacting various sectors. Previously, Australia was China’s top supplier of canola.
Now, trade is resuming, and this initial cargo could pave the way for more. Trade sources suggest China could take up to 500,000 tonnes. Moreover, this could happen by September, with new crop supplies arriving. China’s total canola imports could reach 3.5 million tonnes. Therefore, traders await more concrete details. However, the market anticipates larger volumes later in the year.
Implications and Market Outlook
This development offers potential benefits for Australian farmers. Canola prices could increase, and incomes of farmers would rise. The resumption of trade can stabilize the market, and create new opportunities for growth. Moreover, the removal of Chinese tariffs on Australian barley creates further optimism. Consequently, broader agricultural trade between the two nations could recover. Traders worldwide are keenly watching this development.
Australia hopes for stronger trade with China. Indeed, the future looks promising after several years of trade tension.
