Canada seeks China canola dispute end without WTO

OTTAWA (Reuters) - Canada is confident it can resolve a dispute with China over China's refusal to accept canola with blackleg disease without seeking World Trade Organization action, Agriculture Minister Gerry Ritz said on Wednesday.

Ritz said he met with the Chinese ambassador to Canada on Tuesday.

"It's way too soon to (seek a WTO dispute settlement panel)," Ritz said in Ottawa. "I think we can resolve this long before a panel would be required."

Ritz said China is refusing blackleg canola so that it can reduce its canola inventory.

China was Canada's top canola seed market last year. It imported 2.6 million tons from Canada (not counting July figures that are not yet available). Canola is crushed for its oil, which is used in vegetable oil and biofuel, and for its meal, used in livestock feed.

Canada is the world's top canola exporter.

Canada November canola futures were trading at C$382.20 per ton early on Wednesday, down 4.4 percent from the settled price just before news of China's refusal broke on Thursday.

Blackleg disease is commonly found in Canadian canola, but is no longer a major threat to yields because of resistant varieties. It is already present in China.

Ritz said Canadian technical officials are in China meeting with Chinese officials. Leading Western Canada farm groups called on Wednesday for high-level Canadian officials to work to resolve the dispute over canola, which is Canada's second-largest crop after wheat.

Canada has assured China that blackleg disease has nothing to do with human health and that there's no chance of blackleg from Canadian canola spreading in Chinese fields, Ritz said.

The canola Canada ships to China is genetically modified for producing oil and contains a gene that keeps it from sprouting, Ritz said.

"I think there's some misinformation over there that we'll seek to resolve."

($1=$1.07 Canadian)

(Reporting by Randall Palmer; Writing by Rod Nickel; editing by Peter Galloway)