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Europe Buying Canadian Wheat That Should be Going to China
USAgNet - 08/23/2019

Crop-scorching drought in Europe is providing Canadian canola farmers a timely new opportunity to move supplies that have piled up since China stopped buying this year. Rising European sales are taking some of the sting out of losing the Chinese market for Canadian farmers, although ICE canola futures prices RSc1 are down 11% from a year ago.

Reuters reports that Beijing suspended the licenses of Canadian exporters Richardson International and Viterra Inc this year and halted most other Canadian canola purchases, citing concerns about pests.

Meanwhile, drought that blighted planting, followed by pest attacks during the growing season, have put European Union rapeseed, as canola is known on that side of the Atlantic, on track for the smallest harvest in 13 years.

Canada and China have been locked in a diplomatic and trade dispute since December, when Canadian police arrested a Huawei Technologies Co executive at the request of the United States. Canada is the world's biggest canola producer and exporter, and China is usually its biggest market, crushing the crop into feed for fish and pigs, and into vegetable oil.

Canadian canola sales to the EU have climbed for several years. But this crop year they could range between 1.3 million and 2 million tonnes, more than double the record high, Molesky said. Canadian canola competes in the EU market with imports from the Black Sea region and Australia.

Canada exported 527,000 tonnes of canola to western European countries from July 2018 through June 2019, according to most recent Canadian Grain Commission data. Most shipments are to European crushers that process the oilseed into biodiesel, such as Archer Daniels Midland (ADM.N), Cargill Inc and Avril SCA.

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