Canadian farmers are preparing to take advantage of the current U.S. – China trade spat.
As China plans for tariffs against U.S. soybeans, Canada’s farmers are gearing up to exploit an opening for demand and planning to plant record numbers of oilseeds. David Reimann, a market analyst at Cargill Ltd. Plantings, said Canadian growers are planning to swap out lentils, peas and cereal crops this year in favour of canola amid higher prices and U.S.-China trade tensions.
The canola crop in Canada this year could reach 24 million acres, the most ever and up 4.4% from a year earlier, according to Tony Tryhuk, branch manager of an RBC Dominion Securities office in Winnipeg, Manitoba. The crop can be used as a soybean substitute in cooking oil and animal feed.
“If anything, the China thing encourages more canola,” said Mr. Reimann in an interview with the Canadian Press, noting potential tariffs will probably also boost soybean acres. “It could certainly up canola demand a little bit.” China purchases of Canadian oilseed shipments could climb by several hundred thousand tons, he estimates.
Canada is the world’s top grower of canola, and China is the number one destination for exports of the oilseed. Even before the tariff news, the oilseed was already garnering farmers’ attention amid rising demand from countries such as Japan and Mexico. Futures reached an eight-month high of $531 a metric ton in March and are up almost 7% this year.
Canadian scientists invented canola in 1974 by breeding out undesirable traits from the rapeseed plant. Canada’s canola acres surpassed wheat for the first time in 2017 while soybean plantings have more than doubled in the last decade, with sowings forecast by the government to reach a record this year.
