AUSTRALIAN canola production could rebound to somewhere near 3 million tonnes with an ordinary season after consecutive years below 2mt according to the executive officer of the Australian Oilseeds Federation (AOF).
Nick Goddard said that while a figure of 3mt was below the standard set in the decade leading up to the big NSW / Queensland drought it was around what was considered an average crop throughout the early 2000s.
"We're certainly confident that if current weather patterns continue we're going to see much more normal production even if some growers do decide to go with a more cereal-heavy rotation," Mr Goddard said.
He said there had been east coast deficits in canola over the past two years but he was confident producers would avoid a third.
Good March rain through much of NSW, including the Central West which swing heavily in terms of canola plantings according to seasonal conditions, and good prices of in excess of $600 a tonne meant Mr Goddard expected a solid plant.
"There are some cash strapped growers across the country that will prefer to plant cereals but we're expecting a markedly larger plant and if there is further rain in NSW this week that final planting figure could be larger again."
Lachy Herbert, Riverina Oils and Bioenergy (ROBE) trading manager, said while farmers in the Riverina were cautious after a below par couple of years some were also looking for a change-up.
"There are some that have pushed the cereals pretty hard over the past few years so they are really in need of a break crop and canola fits that bill pretty nicely, especially with the price where it is.
"There has already been inquiry regarding locking in new crop prices, which is understandable when you can get $600/t delivered to your local depot, so there are certainly some that are keen and with an average season and prices like this you should make good money."
He said forecast rainfall through NSW this week would unlikely have too much of an impact in the Riverina where people's rotations are already set but added further to the north in the central west it could see some changes.
"The Central West is where we can get big swings, after a wet summer eight or nine years ago when canola prices were good we saw a 40pc increase in plantings in that region, I'm not saying that will happen this year but it shows the planting figure is very mobile."
Mr Goddard said there was already canola up in parts of NSW.
"The trend towards dual purpose grain and graze canola varieties mean farmers are increasingly happy to plant in March and with the good moisture available the crop has emerged," he said.
"There are some early incidences of insect pressure but generally the canola is growing well in the warmer soil temperatures."
Looking at the market, Mr Goddard said European biodiesel demand was set to continue after a poor local harvest last year.
He added the industry was closely watching the negotiations between Canada, the world's largest canola producer, and China.
Canada has been locked out of the Chinese market for over a year but there are media reports this week that the ban is over and Canadian exports to China will resume.
"The Canadian situation had an impact on our market, we had been doing some business with China, it was not a huge shift and a lot was still going to Europe but China was back on the horizon," Mr Goddard said.
Mr Herbert said the drop in crude oil values would also have a bearish influence on canola prices, but said the negative factors all paled in comparison with the tumbling Aussie dollar.
"The big pricing opportunities are presented by this low dollar, if the value rallied even up to US70 cents it would be a 15pc swing, which, in context, means a $90/t drop in canola cash prices, so you can see it is having a big impact."