China Establishing New Ag Supply Lines: Analyst

Amid increasing global protectionism and trade skirmishes, China remains hard at work establishing new agricultural supply lines, a Beijing-based independent analyst said Friday.

Specializing in Chinese agricultural markets, Ivy Li told an audience at the Grain World conference in Winnipeg on Friday that over the past year alone China has either started importing or increased imports from several non-traditional trading partners, including Russia, India and Kazakhstan.

To that same end, Li also pointed out that China has been buying other agricultural products from Canada, even if it has cut back on the amount of canola it has usually purchases. For example, amid its ongoing trade battle with the U.S., China has substantially increased the amount of wheat it imports from Canada.

“Just in the first nine months of this year, Canada dominated,” Li said. “It has replaced the U.S. with a 71% market share this year.” In 2017-18, Canadian wheat only accounted for less than one-third of China’s total imports.

And along with wheat, China has been buying more peas from Canada as well, Li added. On the other hand, she warned China may reduce the amount of flax it is buying from Canada, as it is sourcing more of its needs from neighbouring Kazakhstan instead.

As for the U.S.-China trade war, Li admitted she had no idea how or when the impasse might eventually be resolved, adding that neither Chinese President Xi Jinping or U.S. President Donald Trump likely have any idea either. However, she described the notion that any potential partial trade deal between the two countries would carry a requirement that China buy a set amount of U.S. agricultural goods as totally unrealistic. Rather, China wants to be free to purchase from whoever offers the best price, she said.

For example, with Australia’s canola production for this year on the wane because of drought, Li said China would merely turn to countries offering a better price.

Source: DePutter Publishing Ltd.

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