MarketsFarm — ICE Futures canola traders have been keeping a close eye on this week’s extradition hearings for Huawei executive Meng Wanzhou in Vancouver.
The hearing is to determine whether Meng will be extradited to the U.S., which requested her arrest by Canadian authorities in December 2018. China, in the wake of that arrest, detained two Canadians on allegations of spying and halted most of its imports of Canadian canola seed.
Should the Huawei chief financial officer end up being released to go home to China, one trader believes canola markets won’t see the effects right away.
Ken Ball of PI Financial in Winnipeg said it’s very likely that China would hold off from buying larger quantities of canola in the immediate aftermath.
“China has a history of doing what’s in their best interests, not ours,” he stated.
Ball pointed to China’s recent inaction in purchasing large quantities of U.S. soybeans after signing the Phase One trade agreement last week.
“China is obviously hanging back in the wings. Because that’s the way they get the best market impact,” Ball said.
He believes there could be a reasonable chance that Meng may not be extradited to the U.S., where she’s facing charges relating to violating sanctions against Iran.
Meng’s defence has argued the crime she’s alleged to have committed is not illegal in Canada. For someone to be extradited, the principle of double criminality must apply: the alleged crime must be illegal both in the country seeking extradition and the country holding the accused.
However, Crown prosecutors have argued that the Huawei chief financial officer isn’t charged with violating U.S. sanctions against Iran; rather, she is charged with bank fraud. Prosecutors have accused Meng of lying to international bankers about Huawei’s business dealings in Iran.
Although China has not completely banned canola imports from Canada, they have certainly been substantially reduced, as data from the Canadian Grain Commission (CGC) show.
As of November, canola exports to China in the 2019-20 marketing year amounted to 473,100 tonnes — a 71 per cent drop from 2018-19.
However, Canada’s total canola exports as Jan. 12 for 2019-20 were at 4.02 million tonnes, about 8.8 per cent off the previous year’s pace.
— Glen Hallick reports for MarketsFarm, a Glacier FarmMedia division specializing in grain and commodity market analysis and reporting.