Canola set to maintain COVID-19 ‘immunity’
The Chinese tariffs on barley and beef have captured the headlines, but many other farming exports also look likely to be adversely by the lasting changes associated with COVID-19.
So far it appears canola will be a notable exception, with industry analysts anticipating strong demand and continuing high prices despite a big increase in the sown hectares this year compared to 2019.
The pre-existing trade dispute between China and Canada means that China is less likely to impose punitive tariffs on Australian canola.
The latest ABARES oilseeds outlook predicted that Australian canola would retain its recent price premium over Canadian canola until 2023.
Comparing recent export canola prices
The report anticipates continuing strong demand for non-GM canola from Australia for use in European food manufacturing. High prices for GM canola and other canola that may not be in demand in Europe will be underpinned by resurgent demand from China, coming off a historically low base as customers look to replace the supply from Canada.
The Chinese imported the lowest tonnage of canola for eight years in 2019–20, partly because our crop was so reduced. Now Chinese producers are looking to substitute canola oil for soybean oil, which is in decline, and most of that growing demand is expected to be met by canola from Australia.
Before the potential extent of the coronavirus disruption was understood, ABARES assumed trade between Canada and China would return to normal in 2022–23. If that still happens, Canadian exports of canola should grow strongly and the prices for Australian canola will probably fall. But the short-term outlook remains comparatively bright.