[Source: Reuters]

Chinese importers are scaling back purchases of Canadian canola with shipments from December likely to plunge as most buyers are reluctant to sign new deals for fear that Beijing could impose retaliatory anti-dumping duties.

The canola trade between the two countries is worth about $2 billion a year, but lower imports by China, the world’s biggest canola importer, could further squeeze ICE canola futures , which have dropped more than 10% in the past month.

China has sufficient canola supply for the coming months, but Canadian oilseed farmers face a double whammy as its reduced buys coincide with import tariff threats by U.S. President-elect Donald Trump, including canola, traders and analysts said.

Oilseed buyers in China have been shipping Canadian canola at a record pace since September to take delivery of cargoes contracted before Beijing unveiled an anti-dumping investigation into Canadian imports of the oilseed, in retaliation to Ottawa’s tariffs on Chinese-made electric vehicles.

Buyers in China have booked to ship just about 250,000 metric tons of Canadian canola, also called rapeseed, for December shipment, two Singapore-based oilseed traders said, after taking around 500,000 tons in November and 863,000 tons in October.

Canola is crushed to produce cooking oil and other products, including renewable fuels, and meal for animal feed.

China also has plentiful supplies of soybeans to bridge any shortfall in the availability of canola, however, traders said.

While Chinese crushers are switching, retail demand for canola oil is likely to persist as many consumers prefer it to alternatives, despite its higher price.

China has enough stocks of canola to last until February, traders said, with buyers likely to switch to other origins, including Australia, in 2025.

China imported 5.074 million metric tons of canola between January and October this year, up from 4.27 million a year ago, customs data shows. That includes 4.84 million tons from Canada, 184,555 tons from Russia and 46,366 tons from Mongolia.