China is likely to face a supply shortage of rapeseed meal by the third quarter of this year as Beijing's tariffs on shipments from top exporter Canada disrupt trade and as alternative sources are unlikely to make up the deficit.
Rapeseed meal futures traded on the Zhengzhou Commodity Exchange have jumped more than 8% since Beijing announced on Saturday a 100% retaliatory tariff on imports of rapeseed meal and oil from Canada effective March 20.
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Chinese tariffs on rapeseed meal and oil came as a surprise to the industry which had been expecting higher duties instead on the oilseed since Beijing started an anti-dumping investigation in September into shipments from Canada.
"Everybody was expecting authorities to announce duties on rapeseed but we were all taken by surprise when this announcement came on oil and meal," said one trader in Singapore. "It is going to hit feed processors hard as they were looking at importing larger volumes of Canadian meal instead of the oilseed."
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Rapeseed is an oilseed crop which is processed into oil for cooking and a variety of other products, including renewable fuels, while the remaining rapeseed meal is used as high-protein animal feed and fertilizer.
China relies on top grower Canada for more than 70% of its rapeseed meal imports and nearly all of the oilseed imports. Rapeseed is also known as canola.
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Chinese customs allows rapeseed meal imports from 11 countries, including Russia, Kazakhstan, Pakistan, Japan, Ethiopia, Australia, India and Belarus, providing options for alternative supplies.
But availability of the product is limited in the international market.
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