Golden glow fades for canola

05 Sep, 2014 02:00 AM
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4
 
Canola producers would be better off looking at potential opportunities in other crops at present

AFTER a golden five-year period, Australian canola producers are now facing the lowest prices for their product since 2009.

A combination of a huge international soybean crop, a likely solid Canadian production of canola, and big rapeseed yields in the European Union and the Black Sea means the entire oilseeds complex has dived south dramatically over the past two months.

This week, Australian canola prices dipped to around $450 a tonne in most port zones this week, around 25pc down on the $600/t port that was the top of the market, and the bad news for growers is that there is unlikely to be much upside pre-harvest.

Cargill Australia canola trader Pierre Colinet said the high amount of carry-out in Canada due to last year’s record harvest and the logistical logjam there last year meant Australian prices are likely to remain under pressure throughout the season.

He said the Canadian canola crush was deteriorating.

“This means there will be increases in unallocated Canadian canola seed.”

On the demand side, the EU’s good production year means there is unlikely to be significant demand from there for Australian canola, unlike over the past five years, where it has been a big market for Australia.

“There will be some demand from the EU for Aussie non-GM canola seed however it won’t be as high as in the past two years,” Mr Colinet said.

Chinese demand, a critical home for Australian producers since the market reopened last year, is also unknown.

Rabobank senior grains analyst Graydon Chong said although there are some dedicated canola markets, the drag from the overall worldwide glut of oilseeds was hitting hard.

“Canola is being dictated by what is happening with soybeans, where there’s a huge US crop bringing the whole complex down.”

“At the same time, we aren’t getting any increase in demand to help eat up those stocks, demand out of China isn’t particularly robust.”

Nathan Cattle, ProFarmer, said the world focus was not on Australian canola just as yet.

“The Canadian harvest is just coming in, and that is the focus for now.

“Chinese buyers will be looking at that, and not thinking about Australia just as yet.”

With prices where they are, Mr Cattle said canola producers would be better off looking at potential opportunities in other crops at present.

“The price incentive just isn’t there at the moment to be forward selling canola, especially when you still have to factor in production risk.”

FarmOnline
Gregor Heard

Gregor Heard

is the national grains writer for Fairfax Agricultural Media
Date: Newest first | Oldest first

READER COMMENTS

Deregul8
5/09/2014 5:37:48 AM

Going to be a big barley plant in 2015. A good Australian crop would see all logistics tested to beyond capacity. Without much needed foreign investment we risk facing buyers not being in the market as occurred in Canada over the winter of 2013/14. Basis can very easily turn negative when the trade can't get product to market.
farmer Barb
5/09/2014 8:00:07 AM

Could the increasing consumption of olive oil be impacting the market?
Bob Phelps
5/09/2014 12:28:42 PM

So, non-GM canola still has a market in the EU, while GM varieties do not. That's a handy edge for non-GM growers when markets are glutted, and is also one more reason for Australia to stay GM-free.
Merri Bee
5/09/2014 2:27:41 PM

I note Non-GM canola still has an EU market and GM does not!

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