Saudi Arabia’s main state wheat buying agency has told grains exporters it will no longer buy Canadian wheat and barley. The move to block Canadian grain is the Kingdom’s attempt to punish Canada economically after Global Affairs Canada publicly criticized the Kingdom for jailing dissidents, enraging the regime.
Saudi Arabia’s main state wheat buying agency has told grains exporters it will no longer buy Canadian wheat and barley in its international tenders, as a diplomatic dispute between the two countries escalates. Canada refused to back down in its defense of human rights after Saudi Arabia froze new trade and investment and expelled the Canadian ambassador in retaliation for Ottawa’s call to free arrested Saudi civil society activists. Canada plans to seek help from the United Arab Emirates and Britain to defuse an escalating dispute with Saudi Arabia, sources said on Tuesday, but close ally the United States made clear it would not get involved.
“As of Tuesday August 7, 2018, Saudi Grains Organization (SAGO) can no longer accept milling wheat or feed barley cargoes of Canadian origin to be supplied,” a copy of the notice seen by Reuters said.
The SAGO agency generally specifies that wheat purchased at international tenders must be sourced from the European Union, North America, South America or Australia. In SAGO’s last purchase of 625,000 tonnes of wheat in an international tender on July 16, Canada was seen as a possible supplier. Analysts said the Middle East had been importing less wheat from Canada and the United States in recent years due to higher shipping costs, while China has become a bigger barley buyer.
“There will be plenty of opportunities for Canada to sell barley and wheat elsewhere,” said Chuck Penner, analyst with LeftField Commodity Research, based in Winnipeg. According to Statistics Canada, the Canadian government’s statistics agency, total Canadian wheat sales to Saudi Arabia excluding durum were 66,000 tonnes in 2017 and 68,250 tonnes in 2016. Canadian barley sales totaled 132,000 tonnes in 2017. But given tightening global grain supplies due to weather problems in Russia, Europe and Australia, Canada might have been poised to win more Saudi barley business.
“This year could have been a year where we could have seen some (Canadian) barley trade there in October-November,” said Jerry Klassen, manager at trading house GAP SA Grains and Products in Winnipeg.
The dispute looks set to damage what is a modest bilateral trade relationship worth nearly $4 billion a year. Statistics Canada data shows that Canada imported just over $2 billion from Saudi Arabia so far in 2018. In return, Canada exported just shy of $1.4 billion to Saudi Arabia since January.The Persian Gulf country is, however, a major supplier of oil to Canada, with about 15 per cent of Canada’s oil imports coming from Saudi Arabia last year. That’s about 100,000 barrels per day, and most of it is bound for Eastern Canada.