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Trade tensions are heating up and this time it is Canada in the spotlight. A Saudi Arabian Agency Stops Buying Canadian Wheat, Barley as a diplomatic dispute escalates.

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, European traders said on Tuesday, as a diplomatic dispute between the two countries escalates.

Traders said they had received an official notice from the Saudi Grains Organization (SAGO) about its decision.

Canada on Monday 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.

“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.

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One Middle Eastern grain consultant said the decision was not a great loss to Canada, though.

“Both Canada and the U.S. lost the Middle East market a long time ago ... because they are at a freight disadvantage (with higher ocean shipping costs) to the EU and Black Sea export markets,” the consultant said.

Global Trade Tensions

This may be a small loss to Canada, but it's another strong signal that countries are willing to impose tariffs and sanctions on the flimsiest of reasons.

Mike "Mish" Shedlock