China Goes Through UAE ‘Backdoor’ to Buy Canadian Canola Oil

(Bloomberg) --

China has found a way to get the Canadian vegetable oil it needs, after shunning direct imports from the country earlier this year, according to FarmLink.

Canadian Grain Commission data for September shows canola exports to the United Arab Emirates jumped 533% from last year to 93,100 tons. Canola from Canada is getting crushed there, and then the oil is being exported to China, said Neil Townsend, a senior analyst at FarmLink in Winnipeg, Manitoba.

Vegetable “oil demand in general is pretty good,” Townsend said in a phone interview. What the UAE is doing is “exporting tangible amounts of canola oil to China,” he said, allowing the Asian giant to get a needed commodity “through a backdoor.”

China was the top of importer of Canadian canola before this year. The Asian nation would crush the seed and then the oil would be used in everything from salad dressing to deep-frying, while the meal was used as livestock feed.

At the end of 2018, Canada arrested Huawei Technology Co. Chief Financial Officer Meng Wanzhou at the request of U.S. authorities. After the arrest, Canadian relations with China broke down with the Asian country banning canola seed imports from two Canadian exporters, citing “pests” found in shipments.

Since then canola exports to China have dropped off significantly. For the months of August and September, they’re down 70.4% to 182,600 tons, according to Canadian Grain Commission data.

©2019 Bloomberg L.P.

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