A DECISION by the Organisation of Petroleum Exporting Countries (OPEC) to rationalise member production has sent crude oil prices up and is likely to have spin-off benefits for Australian canola producers.
OPEC made the decision in order to cut the world glut in oil which has kept crude oil values at historically low levels since 2014.
The production cut saw crude prices rise sharply at the end of last week, up 16pc for the week.
This has combined with concerns surrounding the condition of the soybean crop in Argentina to create some movement in the oilseeds space.
Analysts continue to be concerned with ongoing dryness through key production zones in the South American nation, with light showers recorded last week not enough to boost subsoil moisture.
The USDA also announced a big sale of 426,000 tonnes of US soybeans to China, showing there was still a market for the US product.
There was also big news in the palm oil sector this week, with prices rising to four year highs, in spite of stocks rising.
Analysts suggest the price rise is in part due to concerns about production.Soybean futures jumped markedly late last week on the back of these factors, but Australian canola prices have failed to follow suit, in fact dropping slightly as significant tonnages became available off the header.
However, international canola futures have rallied,with the flagship Winnipeg canola futures exchange hitting five month highs.
Even though prices for new season canola have dipped below $500 a tonne delivered to upcountry sites in many regions, reports are that Australian farmers are still largely happy to cash the canola, with prices more than doubling that of wheat.
GrainCorp operations manager Nigel Lotz said oil profile on receivals recently continued the trend of good oil levels.
“The quality profile is good, there are some good oil levels there, which we are taking care with.
“We need to be constantly checking the temperature with canola with high oil levels to ensure there are not any problems, so it is taking a little bit more work than some years, but it is a fantastic story for the growers with the good oil bonuses on offer boosting prices.”