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China Ban on Indian Meal to Benefit Canadian Canola

BEIJING- China will boost imports of rapeseed and rapeseed meal from Canada, traders said on Monday, after Beijing banned Indian meal after tests showed it contained a toxic chemical.

If China buys more rapeseed, or canola, from Canada, the world's top exporter, it could firm ICE canola prices, which have been rising for the past two weeks in anticipation of larger imports.

China imported Indian oilseeds worth $161 million in 2011 before halting purchases late last year after tests showed some cargoes were contaminated with malachite green, a dye widely used in India to brand grain sacks.

China bans malachite green from ingredients used to produce animal feed. Traders said cargoes of Indian rapeseed meal loaded after January 1 would be denied entry to China.

"We have been told to stop imports until the two countries have resolved the issue," said one trader with Guangdong Junjie Agriculture Trade Co. Ltd, a major buyer of Indian meal.

"We don't expect the ban will have much impact on supplies. China has been buying from Canada and meal supplies from domestic crushers have also increased, which would fill the gap," the trader added.

A rapeseed meal trader with Guangxi Jiahe Grains and Oils Co. Ltd also said there were few Indian supplies being unloaded now, adding: "We will look into Canadian meal to see if quotations are attractive. But meal from domestic crushers is ample and prices are cheap."

Indian grain exporters said they were working closely with Chinese officials to lift the ban. A Chinese inspection team is likely to visit India in March, exporters said, and China's quarantine bureau said on its website it had informed India of the steps it had to take for the ban to be lifted.

"We have already issued an advisory note to all extraction plants asking them not to buy rapeseed or rapeseed cake packed in jute bags with green identification marks," said B.V. Mehta, executive director of the Mumbai-based oilseed processing body, the Solvent Extractors' Association of India.

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