The recent news that China has accepted trial shipments of Australian canola has raised questions about how much it might take and how it will impact the market. Here we take a look at canola exports and how things could change.
It is hard to see much on Figure 1, but it was a good way to use the new charting function on Excel, which can turn a table into a map. Basically, light blue means the country takes some Australian canola, and the darker the blue, the more Australian canola it imports. For June to May 2024-25, Belgium was our largest market, well ahead of Germany in second.
Figure 2 shows the export data more clearly. Maps look good on media posts, but the old-fashioned stacked bar chart is easier to decipher. The European Union is our largest canola market, but unlike China, the EU prefers conventional canola.
The Australian Bureau of Statistics (ABS) data doesn’t differentiate between GM and conventional canola, so we need to go to Canadian data to work out who takes GM. Japan is Canada’s second largest market for canola seed, with the UAE, Mexico being other major markets for GM.
The demand for canola from China dwarfs other countries. In 2024, China imported 5.86mmt of Canola from Canada. The next largest market was Japan with just over 1mmt. Australia has produced just over 6mmt of canola in the last two crops, with most of that being conventional canola.
The last time Australia had access to the Chinese canola market, in 2019-20, they took 0.54mmt. That was a drought year, with only 2.3mmt of canola harvested, and prices very strong, relative to international benchmarks.
Since 2019-20, the discount for GM canola to conventional has fluctuated, largely with the spread between Canadian and European prices. Over the last harvest, the GM discount reached its highest level, at times more than a $100/t discount to conventional.
Canola plantings this year are likely to reflect last year’s large discount, with more conventional and less GM canola in the ground.
What does it mean?
Re-opening of the Chinese canola markets would be good news for canola prices in general, and GM prices in particular. Australia is a closer supplier to China than Canada, which should see GM prices get close to parity with ICE Futures.
Key Points
- China is accepting trial shipments of Australian canola, with potential to re-open the trade.
- China is a huge market for GM canola, with supply largely coming from Canada.
- Australian GM canola prices would see the most benefit from Chinese demand.
Click on figure to expand
Click on figure to expand
Data sources: Trademap, ABS, Mecardo
