The unexpected interim fee will be set at 75.8% and will take effect from Thursday, China said.
China announced its preliminary dumping obligations for Canadian canola imports, a new escalation of a year-long trade dispute that began with the imposition of Ottawa’s tariffs on Chinese electric vehicle imports last August.
The interim fee will be set at 75.8%, which is valid from Thursday, the Commerce Department said in a statement Tuesday.
Canola Trading’s global benchmark, the Canola Futures RSX5, continued exchange (ICE) in November, fell 6.5% to its four-month low, falling 4 months since its announcement.
“This was a real surprise and shock,” said Tony Trifuku, a trader with RBC Dominion Securities.
China, the world’s largest canola (also known as rapeseed), is sourced from almost all of its products from Canada. Sudden obligations will be all except to terminate the import if the import is maintained.
“This is huge. Who pays 75% deposit to bring Canadian canola to China? Thank you very much for saying Canada doesn’t need canola.”
China’s Commerce Department said Tuesday that an anti-dumping investigation launched in September 2024 found that Canada’s agricultural sector, particularly the canola industry, has benefited from “substantial” government subsidies and prioritization policies.
China has the option of extending its deadline by six months, although it is possible to make final decisions on its duties until September, when the investigation officially ends. The final ruling could either bring about a different rate or reverse Tuesday’s decision.
The decision marked a shift from the tone of settlement that Chinese Prime Minister Li Qiang was hit in June during a call with Canadian Prime Minister Mark Carney.
“The move… will put additional pressure on Canadian governments to sort out trade frictions with China,” even Tribium China’s agricultural analyst said Rogers would pay.
Canada’s Trade, Agriculture and the Prime Minister’s Office did not immediately respond to requests for comment. The Canadian Embassy in Beijing did not respond to Reuters’ requests for comment.
China had already imposed tariffs on canola oil and diet in March. Canada is currently facing tariffs on some goods from the US, and is currently in a trade dispute with the two largest economies of the world.
China has launched a damping prevention investigation into Canadian pea starch and has placed a temporary obligation on importing halide butyl rubber, according to a provincial statement.
“Extend the loss”
Replacing millions of tons of Canadian canola can be difficult, according to analysts.
China uses mainly imported canola to make animal feed for the aquaculture sector. Another mandate on importing Canadian Canola meals in March has already put these supplies at risk.
This move provides opportunities for Australia. Australia appears to be set to regain access to the Chinese market with several test cargoes this year after years of freezing in trade this year.
Australia, the second largest canola exporter, has been closed from the Chinese market since 2020, mainly due to Chinese regulations, to stop the spread of fungal plant disease known as “black legs.”
However, even if Australian imports increase, “it’s very difficult to replace Canadian canola completely unless import demand drops sharply,” says Donatus Jankauskas, analyst at CM Navigator, commodity data company.
Commodity funds have a fairly long position in ice canola futures, traders said.
“This will help accelerate that long exit and actually extend the loss,” Trifuku said.
Another trader said the prices of canola are already under downward pressure as it is widely believed that Canadian crops are bigger than previously predicted due to the good weather.
“We’re realising we have better crops that we’re approaching,” the trader said. “This is a gut punch no one had hoped for.”
David Derwin of Ventum Financial Broker said that some traders still don’t know how to make China’s moves as it’s not the final rule.
“Is that a negotiation tactic? Or will China put it in? Is that?” Darwin asked.
