On the first day of trading since China’s decision to impose 100% tariffs on imports of rapeseed meal and oil from Canada, Zhengzhou rapeseed meal and oil contracts experienced a significant surge, according to a Reuters report.
Zhengzhou exchange’s most-active rapeseed meal futures experienced their largest daily gain since September 2022, surging 6% to reach 2,611 yuan ($360) per metric ton.
The price of rapeseed oil futures increased by 5.2% to reach 9,213 yuan ($1,270) per ton.
This move by China is seen as a direct response to ongoing trade tensions between the two countries and is expected to have a considerable impact on the Canadian rapeseed industry.
The tariffs will likely lead to a sharp decline in Canadian exports of these products to China, which has been a major market for Canadian rapeseed producers.
As a result, Canadian farmers may be forced to seek alternative markets or reduce their production, potentially leading to economic hardship in the affected regions.
The price increase in Zhengzhou reflects the market’s anticipation of a reduced supply of rapeseed meal and oil due to the tariffs, as Chinese buyers may turn to domestic or other international sources to meet their demand.
Tariffs on rapeseed oil
New tariffs were imposed on a range of Canadian products, including rapeseed oil, oil cakes, peas, aquatic products, and pork.
The Chinese tariffs on Canadian rapeseed oil, oil cakes, and peas took effect on March 20 and exports were valued at approximately $1 billion based on the previous year’s figures.
These tariffs were implemented alongside a 25% duty on Canadian aquatic products and pork, which had an estimated value of $1.6 billion in 2024.
These measures represent a significant escalation in trade tensions between the two countries and could have a substantial impact on Canadian exporters.
Retaliatory measures
The recently imposed tariffs are not isolated incidents but rather retaliatory measures in response to Canada’s previous trade actions.
Last year, Canada significantly escalated trade tensions by imposing a 100% tariff on Chinese-made electric vehicles and a 25% tariff on Chinese steel.
These tariffs were seen as protectionist measures aimed at shielding Canada’s domestic industries from foreign competition.
China’s response, in the form of new levies, demonstrates a tit-for-tat approach to trade disputes.
Rapeseed price rise may be temporary
The price increase in Chinese rapeseed meal and oil contracts may be temporary, according to analysts.
“China has alternative origins for rapeseed oil such as Russia and the EU and also the Chinese import duty hike could pressure Canadian canola prices, resulting in a sharp decline in product prices,” Anilkumar Bagani, research head of Mumbai-based vegetable oil broker Sunvin Group was quoted in the report.
It also needs to be noted that China has huge rapeseed oil stocks at the moment and the crush capacity utilisation is also considerably high.
Last year, China initiated an anti-dumping investigation into Canadian rapeseed. However, rapeseed was not included in the tariffs announced on Saturday; only rapeseed meal and oil were affected.
Traders and analysts said that this likely creates an opportunity for negotiation during trade talks, according to the report.
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