• Loddon Herald

Canola prospects brights

THE Australian canola grower is sitting in a good position leading into the 2021-2022 harvest.

Domestic canola prices are at historically high levels and it appears we will produce a record crop.

The September ABARE Crop Report is forecasting the production of canola to increase by 11 per cent to a record high of over 5 million tonnes.

Area planted to canola is estimated to have increased 24 per cent to reach the third highest on record of just over three million hectares.

This has been a result of strong global prices and excellent planting conditions in Western Australia and New South Wales.

However, the average yield is forecast to fall by 10 per cent from the record high of last season.

Canada’s StasCan also released its September report putting the Canadian crop at 14.7mmt. (against a 10 year average of 19.5mmt). The global oilseed complex is extremely tight. It is forecast that carry out stocks for global canola will be circa 4mmt which is the lowest in the past 10 years.

The European Union is a significant importer of Canadian canola.

Australian canola attracted a premium over Canadian canola from July 2018 to December 2020.

This premium was tied to the value of Australian canola as non-GM meal in Europe’s dairy industry. Low canola production in Australia, large crops in Canada and a trade dispute between Canada and China also contributed to the price premium.

As of December 2020, Australian canola was no longer trading at a premium over Canadian canola.

Tighter supplies in Canada and strong demand are supporting a sharp increase in the Canadian canola price.

The current higher price for Canadian canola could improve the likelihood of Australian canola regaining market share in the European Union.

Australia accounts for between 15 and 20 per cent of the world export trade.

The highest forward prices we have seen to date for the 2021-2022 season was on the August 26 with non-GM Canola delivered GNC Geelong at A$895/mt (+/- AOF bonifications).

More locally at Boort the price was at A$872.75/mt (+/- AOF bonifications).

Many growers have already locked in a portion of their 2021-2022 production (estimated 10 per cent-20 per cent) against these higher prices.

The price spread between non-\GM canola and GM canola is the tightest we have seen. GM canola would normally attract a discount of A$40-$60/mt however upcountry site pricing has the discount at $5/mt (delivered crusher slightly wider at around $30/mt).

We would anticipate that domestic prices will come under some pressure at harvest as growers take advantage of these higher prices.

However post-harvest oilseed prices are forecast to remain historically high in 2021–2022 due to strong global demand and tight inventories.

The world canola price is forecast to increase as consumption outstrips production.

* Jon Bucknall is manager of Boort Grain Co-op

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