February 8, 2012

 

Tongwei to increase Canadian rapeseed meal buys

 

 

By 2015, Tongwei Co Ltd, a Chinese animal feed firm, will boost its Canadian rapeseed meal purchases by up to CAD240 million (US$242 million) yearly, after China banned meal from India in late 2011.

 

Canada's agriculture minister Gerry Ritz, who announced Tongwei's plans on Tuesday (Feb 7) during a visit to China, said its purchases could be worth CAD900 million (US$904.56 million) over the next decade.

 

Chinese oilseed traders have expected increased imports of rapeseed and rapeseed meal from Canada, the top rapeseed exporter, after China halted purchases of Indian meal because some cargoes were found contaminated with a dye used to brand grain sacks.

 

"This certainly puts some long-term stability in that (industry)," said Brian Wittal, agriculture analyst at Pro Com Marketing in Alberta. "If we can maintain and hold onto that market, that will be the key thing. The big thing is whether India can adjust and get back into (China)."

 

Tongwei's plans are a result of research funded by the Canadian government to demonstrate the quality of rapeseed meal for Chinese dairy and aquaculture processing companies, Ritz said.

 

The Grain Growers of Canada farm group, which is travelling with Canadian officials in China, said Tongwei could buy up to one million tonnes of rapeseed meal within five years for aquaculture. The Canola Council of Canada, also on the trip, pegged the value of Tongwei's plans at up to US$300 million, including CAD60 million (US$60.30 million) worth of rapeseed meal it already buys annually.

 

ICE Canada rapeseed futures finished higher on Tuesday, even as US grains dipped, and a trader said the news gave prices a lift.

 

Rapeseed is mainly crushed for its oil for use in salad dressings, margarine and other food products, as well as in biodiesel. The meal is used mainly to feed animals, especially cattle.

 

China has set a goal of doubling milk production by 2015.

 

Rapeseed trade between the two countries - the top two producers of rapeseed - has at times been strained due to Chinese restrictions on which of its ports can accept Canadian rapeseed with the fungal disease blackleg.

 

China was not a significant buyer of Canadian rapeseed meal until 2009.

 

Boosting trade of rapeseed meal with China allows Canada to diversify its export markets. The United States is by far the biggest importer of Canadian rapeseed meal, but in recent years US regulators refused access to meal from some Canadian plants due to concerns about salmonella bacteria.

 

That dispute has since been resolved.

 

Canadian Prime Minister Stephen Harper is touring China this week to discuss crude oil exports and other issues, including agricultural trade.