The U.S. Food and Drug Administration (FDA) has lifted import restrictions on Cargill Inc's giant canola crushing plant in Western Canada after it had repeatedly found salmonella in its shipments during the past year.
The news lifted ICE Canada canola futures. Cargill's plant in Clavet, Saskatchewan is the largest in North America, with crushing capacity of 1.5 million tonnes.
The plant, which was expanded last summer, can now resume sales to Canada's biggest market for canola meal and boost Canadian crushing volumes that had fallen 7 percent so far this crop year due largely to salmonella problems.
The FDA's website no longer lists the Cargill plant among those on import alert status for salmonella in animal feeds. It still lists three Bunge Ltd canola plants in Nipawin, Saskatchewan; Hamilton, Ontario; and Altona, Manitoba. Viterra's plant in Ste. Agathe, Manitoba, is also still under import-alert status for salmonella detection.
"(It's) confirmed. We are off and able to trade with no restrictions," said spokesman Robert Meijer in an email to Reuters on Tuesday.
Between November 2008 and October 2009, the FDA had halted Cargill shipments of canola meal or bulk canola 23 times, the FDA's online database shows.
The FDA imposes import-alert status on companies whose shipments they refuse, which adds scrutiny to their future shipments.
Salmonella bacteria can cause sickness in humans, although canola meal is used as a protein source in livestock feed.
Along with crushers processing less canola, the salmonella problem has led to crushers shipping less meal to the United States and more to Mexico, Thailand and Taiwan.
Both of those trends are likely to continue while restrictions continue on Bunge and Viterra. The Canadian Oilseed Processors Association (COPA) met with FDA officials in Washington last month, but has not commented on the talks.
ICE Canada January canola futures closed up 0.6 percent, with traders citing the Cargill news as a key bullish influence.
The resumption of Cargill shipping canola meal into the United States may have contributed to weakness early on Tuesday in Chicago soymeal futures, said John Christopher, an analyst at Linn Group in Chicago. Soymeal is also used in livestock feed.
Chicago Board of Trade December soymeal futures closed down 1.5 percent.
In the longer term, strong Chinese demand for soymeal will continue to support prices, Christopher said. Cargill's canola meal shipments will also pressure cash soymeal prices, said a dealer in Mankato, Minnesota.
Viterra is working with COPA and the Canola Council of Canada to make improvements to its canola plant, a company spokesman said on Tuesday. A Bunge spokeswoman said the company is also working to get FDA approval and resume U.S. shipments.
Cargill did not say what actions it had taken to have restrictions lifted.