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Sources familiar with the matter say Canberra is close to reaching an agreement with Beijing that would allow Australian suppliers to ship five trial cargoes of canola to China, in a move that could pave the way for ending a long-running freeze in this trade.
China is the world's largest canola importer and relies almost entirely on imports from Canada, though these supplies could face constraints amid an anti-dumping investigation currently under way in Beijing. China imposed 100% tariffs on Canadian canola meal and oil earlier this year amid escalating diplomatic tensions.
Australia, the world's second-largest canola exporter, has effectively been shut out of the Chinese market since 2020, largely due to Chinese rules aimed at preventing the spread of a fungal plant disease. However, these trial shipments could potentially reopen the market to Australia and erode Canada's market share.
According to two sources in Australia's agriculture sector familiar with the negotiations, Chinese and Australian officials are currently finalising a framework to meet Beijing's phytosanitary requirements, which are designed to prevent the spread of blackleg disease.
One of the sources said:
"It looks like we've found a path that satisfies everyone, and now we need to trial a few shipments to see if it actually works."
According to the sources, trading companies will handle the five shipments once the regulatory framework is agreed.
According to two sources at trading houses familiar with the negotiations, the shipments will range between 150,000 and 250,000 tonnes of Australian canola (also known as rapeseed) bound for China.
The sources declined to be named as they were not authorised to speak publicly on the matter.
In response to a query from Reuters, Australia's Department of Agriculture said:
"Government discussions on this matter remain active and ongoing, and the details have not yet been finalised."
China's Ministry of Commerce and the General Administration of Customs did not respond to requests for comment.
China has purchased an average of around 4 million tonnes of canola annually over the past five years, worth more than $2 billion, for use in cooking oil, renewable fuel and animal feed.
These developments come as Australian Prime Minister Anthony Albanese is currently visiting China, a sign of improving bilateral relations since his Labor government came to power in 2022.
Australia conducted two smaller trial shipments to China last year, with 500 tonnes of canola exported in each of June and July 2024, according to Australian trade data.
Negotiations have focused on meeting China's requirements that impurities such as husks and broken seeds in canola shipments not exceed 1%, as well as addressing concerns over the transmission of blackleg disease, according to the two sources familiar with the talks.
Source: Reuters