Canada hopes to soon end canola dispute with China

By Rod Nickel

WINNIPEG, Manitoba (Reuters) - Canadian agriculture minister Gerry Ritz said on Monday he's hopeful of a resolution this week to China's refusal of Canada's canola with blackleg disease, as officials from the two countries continue to meet in China this week.

China, Canada's No. 1 export market for canola seed last year, has said it will not accept canola with blackleg as of November 15. Ritz, speaking in the western city of Winnipeg, said he's hopeful of an extension on the deadline this week or a withdrawal of the ban altogether.

"They are a global player and have to recognize the science that follows this (blackleg disease)," Ritz told reporters after announcing a loan to a cattle-processing plant. "I think they're coming to that realization. Hopefully we can move that date back."

Canada is the world's top exporter of canola.

Canadian officials have been in Beijing since late last week, Ritz said. Industry sources have said another meeting between Canadian and Chinese officials is scheduled for Monday.

Ritz met with the Chinese ambassador to Canada on Tuesday.

Blackleg, a disease caused by a fungus that can kill the canola plant but has no human health risk, is not a major threat to Canadian crops because of resistant crop varieties. However, it is commonly found on canola seed.

The seed Canada ships to China is genetically modified for its oil content and is processed, not replanted, Ritz said. China is concerned about dirt moving with the product, he said.

China has large reserves of canola and is using the ban on Canadian canola to reduce its supply, Ritz said.

"They're starting to come to an understanding that this maybe wasn't a good move on their behalf," he said. "I also explained to the ambassador that if they thought this was a great way to try and negotiate a better price, think again. We still have probably at least half of our canola still in the field with the weather conditions that are there."

Industry estimates suggest up to one-fifth of the crop is lying in fields, too wet to harvest.

ICE Canada January canola futures was up 1.6 percent early on Monday, with optimism about Canada's talks with China one of the bullish factors, a trader said.

China has assured Canada that shipments already moving to China will be accepted up to November 15, Ritz said.

He also said that officials from Argentina, the United States and Australia are making the same arguments to China.

"We're not alone in this," Ritz said.

China will also refuse Australian canola with blackleg, the Canola Council of Canada has said, but the United States Department of Agriculture has said its small canola exports to China have not been affected by China's stance on blackleg.

(Editing by Lisa Shumaker)