G3 Canada's manager of pooling says a surprise change in import regulations from China is the cause of recently weakened canola markets.

Dave Siminot says last week China lowered the amount of dockage it would allow on canola imports, which has thrown uncertainty and extra costs into the market. Last week alone, Siminot says canola futures markets dropped $20 per tonne.

He hopes this is an overreaction in the markets, but thinks canola values for old crop will likely be weaker for the last half of the year.

"Going forward, it's really uncertain," he says, "I mean a number of things change. China is, by far, the largest export destination for Canadian canola, but the domestic crush market is the biggest ahead of China. So when canola gets cheaper, the crush margins domestically are suddenly better and the demand domestically is going to pick up. On top of that, there are other export destinations that will become more interested now that Canadian canola is going to be a little bit cheaper."

Siminot says it could be a short term problem, or it could last a bit longer, but he doesn't think it will a permanent feature.

The latest pool return outlooks from G3 showed a drop in canola of $15 per tonne in store Vancouver or St. Lawrence for both the 2015/16 winter pool and 2016/17 early delivery pool.