IT IS SET to be a big year for canola, according to the Australian Oilseeds Federation (AOF), which has predicted total production to go close to the Australian record of 2.4 million tonnes, set in 1999.
Strong prices for the oilseed have meant farmers have flocked to the crop, with acreage forecast to be up by 245,000 hectares on the 2010-11 season.
Prices are hovering at around $580/t port, with a slight premium in South Australia, which does not produce GM canola.
The AOF is predicting production will rise around 300,000 tonnes year-on-year, with the increase primarily due to projected better harvest conditions.
“Last year was one for the record books” says AOF executive director, Nick Goddard. “The heavy moisture conditions at the end of the season certainly hampered harvesting, with some crops still coming off in February, but the conditions also laid down a great sub-soil moisture profile for the current season.”
He reported that around 70pc of the canola had been planted in NSW and Victoria, with farmers in some of the drier areas of northern NSW, the Mallee of Victoria, and south east SA, awaiting opening rains to penetrate the top soil before commencing planting.
In an ironic twist, while it is too dry in some areas, in parts of southern NSW and the Western Districts of Victoria, some paddocks are still too wet to get onto in order to plant.
The situation in Western Australia, however, is not as bright. Producing around 50-60% of the nation’s canola in a typical year, last year the abnormally dry conditions dropped the WA share to around a third of the national crop, with a similar share currently projected for this season.
“WA is traditionally the backbone of the Australian canola crop, and certainly the majority of Australian canola exports usually emanate from WA” Mr Goddard said.
“In the north, around Geraldton, and on southern coast, there has been sufficient rain to get sowing underway, but elsewhere, growers are keeping a watchful eye on the western skies and weather maps for signs of decent rain before firing up their planting gear” he said.
Market-wise, the international focus is on the European crop.
Emerald Group’s general manager of trading, Chris Kochanski, said dry conditions were impacting on canola crops in France, Germany and Britain in particular.
Along with this, there has been a delay in the planting of the Canadian crop due to excess moisture, although this has cleared up in the past fortnight, allowing good plantings.
“We’ve seen prices come up about $20/t in the past month, but generally it has been relatively stable,” Mr Kochanski said.
Cargill canola trader Katie Colvin said the market was watching weather on either side of the Atlantic.
“A few concerns have emerged in Europe, however most of the crop would still benefit from rain in the coming weeks.”
Mr Kochanski said Australian farmers had not yet come to the market looking to negotiate forward contracts.
“I think we are just a little bit below that crucial pricing point, if we got to $600/t port, we would see more interest.”
Ms Colvin said there had been a small amount forward contracted when prices reach $600/t port, but most growers were waiting on crop emergence before committing too much.
He said South Australia could be the beneficiary if there were shortages in Europe.
“The Europeans don’t buy GM canola, so South Australia’s status as GM free is leading to a small premium to east coast non-GM prices.”
Ms Colvin said there was a delay in the planting of the US soybean crop, with the amount planted well behind the previous corresponding period last year.
However, she said there was still time to plant and also said there was the potential for a big crop in South America.
Mr Goddard said the usage of canola was diversifying.
Domestically, he said there was strong interest in canola lines with high oleic oil levels, while there is also demand from the biodiesel industry.
Mr Goddard said in spite of the premium for non-GM canola, farmers were still interested in GM lines as a means of managing problem weeds.
He said around 10pc of last year’s crop nationally was GM.