Canola production cut, but prices up

Canola production cut, but prices up


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The Australian Oilseeds Federation has come out with an Australian canola crop estimate of 3.1 million tonnes.

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This year's canola crop in Victoria is in good condition.

This year's canola crop in Victoria is in good condition.

THE AUSTRALIAN Oilseeds Federation (AOF) has come out with a canola production forecast some 200,000 tonnes, or 6 per cent, lower than recent Australian Bureau of Agricultural and Resource Economics and Sciences (ABARES) estimate.

Nick Goddard, of the AOF, said his organisation pegged the 2017-18 canola crop at 3.1 million tonnes in its July canola crop report, lower than the ABARES figure of 3.3mt.

He said a lack of rain in key canola producing regions in Western Australia and South Australia were the major reasons for the cuts.

However, while seasonal conditions are poor in some parts, Australian canola producers have welcomed a sharp spike in canola values caused primarily by a rise in international soybean prices.

Tobin Gorey, senior commodity analyst with the Commonwealth Bank, said concerns regarding dry weather were spreading from the US spring wheat belt south and east into soybean producing regions.

This has seen soybean futures peaking at levels close to three year highs.

Canola has been dragged along in the slipstream, although with concerns surrounding both the Australian crop and also the Canadian crop, the world’s largest canola exporter, there are fundamental issues in canola as well.

“Canola prices have gone up, but we have seen the spread between canola and soybeans narrow from $30/t to $26/t indicating it is soybeans that are the main driver in the price gains,” Mr Gorey said.

Currently, Australian new crop canola prices are at around $550/t delivered port.

Mr Goddard said after a record dry June in many areas, early July rainfall had boosted confidence once again.

However, he said the AOF had not lifted its yield estimates with the rain as it was generally only around the 15mm in the major canola growing regions.

In line with the dry start, the AOF has slashed planted area forecasts in WA and SA on the back of crops failing to germinate, although some analysts have suggested there could be further cuts from official AOF figures.

Mr Goddard said large blocking high pressure systems, influenced by the sub-tropical ridge, had stopped traditional frontal-system driven rain in many southern canola growing regions.

“This has been a problem in particular for the the west coast facing regions of WA and Eyre Peninsula in SA,” he said.

He said the medium term forecast of no major rain throughout July in these areas was a bad outcome for canola crops in these areas.

The AOF has a national total of 2.3 million hectares of canola planted, with a yield estimate of 1.33 tonnes a hectare.

The planting estimate is in line with the five year average, while projected yields are down from the average of 1.53t/ha.

Mr Goddard said the usage of farmer stored seed in some cases due to a lack of access to certified seed was part of the reason for the yield downgrade, along with the dry.

He said crops in Victoria looked best at present, followed by NSW.

However, while crops are in generally good condition in Victoria, with good rainfall, there have been other issues, including problems with mice and slugs and uneven germination in parts.

These problems have not stopped the AOF forecasting above average yields for the southern state.

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