Canadian canola exporters book China sales despite trade fears

WINNIPEG, Manitoba - Canadian canola exporters are making small sales of the oilseed to China under Beijing's stricter terms, an industry group and three sources said, despite warnings that a tougher shipping standard would cripple C$2 billion ($1.55 billion) in trade.

The dispute over the new standard, which takes effect on Sept. 1, threatens to mar Canadian Prime Minister Justin Trudeau's visit to China next week. Each nation wants to increase trading with the other.

Canada's trade minister told Reuters this week that the relationship could not progress until the issue is resolved, prompting Beijing to criticize Ottawa for linking the two matters.

The sales of the oilseed, which is crushed to produce vegetable oil and animal feed, now risk undermining Canada's aggressive negotiating stance with China.

Industry groups in Canada, the world's biggest canola exporter, have said the standard would be expensive to meet. China, Canada's top canola export market, says a tougher standard on foreign material is needed to protect against crop disease.

Cargill Ltd, Louis Dreyfus Corp and Parrish & Heimbecker have made sales ranging from about 30,000 to 60,000 metric tons to China for delivery after Sept. 1, according to trade sources who were not authorized to speak publicly. The Canola Council of Canada confirmed sales under the new standard, but not details.

Canada's biggest canola exporters, Richardson International and Glencore Plc-owned Viterra Inc, however, are balking at China's new standard.