Australia now seems assured of selling a good part of its 1999/00 canola crop, forecast at 2.2 million tonnes, into China, reversing the mild despair of a month or so ago. Opinions are divided to some extent among Australian traders on the strength of Chinese buying and on the extent of the price rise but market optimists form the majority.

The dominant Australian-eye view of the market is that China will easily buy three million tonnes of canola in the period from July 1999 to June 2000. One leading canola trader who did not want to be named said on his book China had bought 1.2 million tonnes from Europe and Poland, at least 800,000 tonnes from Canada and bought at least 200,000 tonnes from Australia since July.

This brought China's purchases to 2.2 million tonnes so far in the second half of calendar 1999 alone. "They'll buy moreyet. By the time they finish their programme, if they can actually get hold of the seed, it will be closer to 2.4 million tonnes for the six month period," this trader said.

With China presently buying 100,000 tonnes of canola a week, the only real question was how long China would continue to buy at its present pace and how much more than three million tonnes it would buy in the full year to next June. Australia was assured of selling at least another 100,000 tonnes of canola to China for December delivery, although this had not been contracted for yet, the trader said. "They'll buy some more from Canada yet for December and they'll buy some more from Australia," he said.

"At the rate they're going they'll buy the whole (Australian) crop," he said. "The real question mark is whether they're going to continue at this pace." If China continued buying at its present pace it would buy five million tonnes, although that did not seem feasible, he said.

Another trader with a major grains trading house morecautiously put China's purchases at 1.8 million tonnes through to next January. This left it debatable whether Chinese buying would take it past the three million tonnes mark to next June, he said.

Both views of the market agree that Australia has sold 200,000 tonnes of canola to China since June. Traders say prices have risen to US$228-229 a tonne from the $215 level at which earlier Australian export deals were struck with China. "That was the real low of the market, we'll never see that again," the trader said. The more cautious trader saw prices as still on $215. "Nothing has traded at that level ($228-$229) for a long time," the less optimistic trader said.