China’s Canola Processing Halted Amid Supply Chain Disruptions
A significant development in the agricultural trade sector has emerged as China, the world’s largest buyer of canola seeds, faces an unprecedented halt in its canola processing operations. Earlier this month, a second cargo carrying 60,000 metric tons of Australian canola arrived in China, but it remains unprocessed, leaving crushers idle for the first time since 2015. This situation is a direct consequence of China’s diplomatic fallout with Canada, which led to a suspension of Canadian canola imports last year, tightening the supply chain.
The first bulk carrier, the Armonia A, docked in Guangdong province in late November, followed by the Union Mariner, which arrived in the Guangxi region in early January. Both shipments are expected to be processed after clearing customs; however, as of now, no processing has occurred. The reasons for this delay remain unclear, and inquiries directed to Chinese customs have gone unanswered. According to data from consultancy MySteel, this halt in processing marks a significant shift in China’s canola crushing industry, which has not experienced such a standstill in nearly a decade.
Australia Steps In to Fill the Void
Australia, the world’s second-largest canola exporter, has been working to fill the gap left by the absence of Canadian canola. The country was previously barred from the Chinese market in 2020 due to biosecurity regulations aimed at preventing the spread of the fungal disease blackleg. However, as relations between China and Canada deteriorated, Australia seized the opportunity to re-enter the market. By mid-2025, state-run agricultural trader COFCO signed agreements to ship close to half a million tons of Australian canola.
Despite the current processing delays, exporters are not yet alarmed, as Canadian shipments typically clear customs within a week. However, industry insiders have noted that if no progress is made by mid-February or March, concerns will escalate. Meanwhile, Canadian Prime Minister Mark Carney is visiting China this week, raising hopes for a potential resolution that could restore Canada’s access to the Chinese market. Canada’s Foreign Minister Anita Anand has indicated that discussions regarding the canola issue have been productive, and the market is closely monitoring developments.
As the situation unfolds, analysts like Zhang Deqiang from Sublime China Information suggest that while demand for canola meal in China is currently low, it is expected to rebound in the second quarter. If Australia can supply between 2 to 3 million tons this year, it could effectively fill the gap left by Canadian imports. The outcome of China’s ongoing anti-dumping investigation into Canadian canola is anticipated in March, which could further influence the dynamics of the canola market.
