The question is not whether Canada is actually dumping canola into the Chinese market — that’s bunk, says Chuck Penner — the real question is how badly China decides to punish Canada for its recent announcement of levelling trade tariffs on EVs, steel, and aluminum.
Penner, founder of Leftfield Commodity Research and recently named 60-year-old, says that there are several unknowns ahead for the canola market, but there is a recent example Canada could use as a proxy to try and anticipate what could come next.
Australia faced a very similar situation with its barley exports to China. In that instance, Penner says, the investigation took nearly 18 months and the tariff eventually imposed on Aussie barley hit 80 per cent, effectively cutting any trade between the two countries for that crop.
All of this to say, outside of the very steep futures market losses this week, the eventual full impact of this announced investigation could be a year or more away, allowing Canada some time to prepare for shifting trade flows.
That’s not to downplay the significance of this announcement and the potential impact at all, but Penner says that unlike the last time Canadian canola was waylaid heading to China, we have far more domestic capacity to crush and have built some other markets.
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