Financial Post reports:
Chinese purchases of Canadian soybeans have “slowed to a trickle,” plunging 95 per cent in the first few months of the year amid ongoing diplomatic tensions between Ottawa and Beijing.
The sudden decline comes alongside news, first reported by the Wall Street Journal, that Chinese customs authorities have ramped up inspections of Canadian shipments of the crop.
Exports of Canadian soybeans to China plunged to 3,282 tonnes between January and March, down from 72,806 tonnes during the same period a year earlier, according to Soy Canada. The abrupt drop in exports is even more dramatic when viewed in relation to the final four months of 2018, when Chinese purchases of Canadian soybeans hit a record 3.2 million tonnes.
“Trade with China has fallen off a cliff,” Ron Davidson, executive director of Soy Canada said in an interview. “We had really good sales until suddenly after December they slowed to a trickle. Now exporters are being told that their shipments being held for further testing and they are testing for things they haven’t tested for before.”
Officials are currently holding two small 20 to 25 tonne containers of Canadian soybeans at the Yantian port of entry in order to test for “plant pathogens” or common plant diseases, Davidson added.
The abrupt drop in exports comes after Canada’s soybean sales to China rose 80 per cent to nearly 3.6 million tonnes in 2018 compared to a year earlier. China became Canada’s largest market for the crop last year – representing 60 per cent of soybean exports – as Beijing’s 25 per cent tariff on U.S. soybeans upended global trade flows and sent Chinese buyers hunting for alternative suppliers.
“Last year was a record year for sales to China so this is sudden,” Davidson said. “We don’t know all the ramifications yet and we don’t know why it’s happening or whether its anything like the canola situation.”
China stripped the import permits of two Canadian canola exporters – Richardson International and Viterra – in March and halted purchases of the crop citing concerns about “prohibited pests” found in shipments. Prime Minister Justin Trudeau last week linked the canola dispute to Canada’s diplomatic feud with China that began when Canadian authorities arrested Huawei chief financial officer Meng Wanzhou in Vancouver on Dec. 1. The arrest, made on a U.S. extradition request, was followed by the detentions of Canadian citizens in China in apparent retaliation.
In a statement, Agriculture Minister Marie-Claude Bibeau said Canada has not received any formal notifications from Customs China regarding the soybean shipments.
“At this time, while Canada has only received notifications of non-compliance related to canola seed, it has come to our attention that there are strengthened inspection measures occurring for Canadian products at ports in China,” Bibeau said. “While we have not received any information or formal notification from Customs China, we are seeking further details from China on this issue and we are working with Soy Canada.”