Australia Nearing Canola Export Deal with China After Years-Long Trade Freeze
Australia is close to securing a deal with China that would allow five trial shipments of canola—also known as rapeseed—to be exported to the Chinese market, according to sources familiar with the matter. The tentative agreement signals a possible thaw in trade relations that have been frozen since 2020.
China, the world’s largest importer of canola, typically relies heavily on Canadian supplies, but those flows face disruption amid Beijing’s ongoing anti-dumping investigation. This year, China imposed 100% tariffs on Canadian canola meal and oil due to escalating diplomatic tensions.
As the world’s second-largest canola exporter, Australia has been blocked from accessing the Chinese market for the past four years, primarily due to phytosanitary regulations aimed at preventing the spread of blackleg, a fungal plant disease. However, the proposed trial shipments could restore limited access for Australian exporters and potentially reduce Canada’s market dominance.
According to two sources from Australia’s agricultural sector, Chinese and Australian officials are in the final stages of formalizing a framework agreement that would meet Beijing’s plant health requirements. “It looks like we’ve found a pathway that works for everyone,” one source noted. “Now we need to run a few ships and see if it all works.”
Once finalized, the five trial cargoes will be managed by trading firms, and are expected to carry between 150,000 and 250,000 metric tons of Australian canola to China, according to individuals involved in the talks. The sources declined to be identified due to the sensitivity of the negotiations.
Responding to a Reuters inquiry, Australia’s Department of Agriculture said discussions with China were still active and no final agreement had been reached. China’s Ministry of Commerce and General Administration of Customs did not immediately provide comment.
China has averaged annual imports of 4 million metric tons of canola—worth over $2 billion—over the past five years, using it in cooking oil, animal feed, and renewable fuels.
The renewed talks come as Australian Prime Minister Anthony Albanese visits China, highlighting an improvement in diplomatic ties since his Labor Party took office in 2022.
The upcoming shipments follow smaller test deliveries in mid-2024, when Australia exported 500 tons of canola to China in both June and July, according to trade data.
Negotiations have centered on admixture limits, with China requiring shipments to contain less than 1% impurities—such as chaff and broken seeds—and its concerns over blackleg contamination. Australian exporters often exceed this threshold, unlike Canadian suppliers, who typically clean their canola before export.
Traders noted that increased Chinese demand could lift Australian canola prices, though they cautioned that Australia may not fully replace Canadian supply. This year’s Australian harvest is expected to yield 5.7 million tons, the smallest crop in five years due to poor weather and reduced planting.
Roughly 4 million tons of that output is expected to be exported, primarily to existing buyers in Europe and other regions, one trade source said. “China might struggle to get more than their trial volume depending on how quick they move,” the source added.
As of July 4, China’s canola stockpiles stood at 159,000 tons, the lowest level for this time of year in nearly four years, according to Zhang Deqiang, an analyst at Sublime China Information.
