Canadian Soybeans Become Latest Victim in China Trade Spat

(Bloomberg) -- Canadian soybean shipments are being held in Chinese ports for inspections, signaling that tensions spurred by the arrest of a top Huawei executive last year are expanding beyond canola.

Members of Canada’s soybean association were informed by Chinese importers that two cargoes will be held at the port of entry until a number of tests for plant pathogens have been performed. That’s part of heightened scrutiny of all shipments of soybeans to China.

“It has come to our attention that there are strengthened inspection measures occurring for Canadian products at ports in China,” Canadian Agriculture and Agri-Food Minister Marie-Claude Bibeau said in an emailed statement Friday. “We are seeking further details from China on this issue and we are working with Soy Canada.”

The more stringent inspections, reported by the Wall Street Journal on Thursday, come after China revoked the canola seed import licenses of two Canadian exporters and China detained two Canadians. That follows the December arrest in Canada of Huawei Chief Financial Officer Meng Wanzhou at the request of U.S. authorities.

Last week, Canadian Prime Minister Justin Trudeau said he believes Canadian canola is being used as a pawn in the ongoing trade war between the U.S. and China. Last weekend, Bibeau attended the G20 agricultural ministers’ meeting in Japan where she raised the canola issue with her Chinese counterpart Han Changfu.

Nervous Buyers

Even before this week, the Canadian soybean industry signaled it may be getting caught up in the trade spat after first quarter exports to China fell.

“We’ve heard nothing officially, but some of the exporters reported their customers were nervous about importing soybeans from Canada because they weren’t certain that the market access would be normal,” Ron Davidson, executive director of Soy Canada, said by telephone.

Chinese demand for Canadian beans jumped last year as buyers from the Asian nation turned away from American product amid Beijing’s tariff tit-for-tat with Washington.

“We’ve got a situation where we’ve sort of been forced into becoming very reliant on one market and if there’s a problem with that one market then exports are increasingly at risk," Davidson said.

Soybeans aren’t as big a deal in Canada as other crops. Statistics Canada estimates 5.6 million acres of soybeans this year compared with 21.3 million acres and 25.7 million acres for canola and wheat, respectively.

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