Canola bounces back

Hot and dry conditions in the northern hemisphere could help to return the gloss to Australian canola prices.

Some of the gloss could return to canola prices if overseas markets are to be a guide.

The Australian crop is likely to be revised upwards, and challenging seasonal conditions in the northern hemisphere have boosted international demand.

Industry sources say recent rain could help contribute to a 5.5 million tonne crop domestically, compared to earlier estimates of 5 million tonnes. In addition, prices are projected to peak at the higher end of $700s a tonne.

Episode3 analyst Andrew Whitelaw said hot conditions overseas had taken some of the yield expectations from the northern hemisphere crop, and there would be market demand for Australian canola.

“It’s a story of giving with one hand and taking away with the other,” Mr Whitelaw said.

Initially, Australian prices were considered to be discounted compared to competing countries. Now, Australia could be in a position to fill a void.

Mr Whitelaw said growers could see prices for canola go to the higher end of $700 a tonne at Geelong in the next couple of months.

“But conversely, there is the danger prices could go into the low $700s a tonne as well,” he said.

“There are a lot of factors at play.”

Mr Whitelaw said he saw an opportunity for Australia to supply non-GM markets overseas and potentially fill the void from Canadian and US crops that might yield less due to the heat.

Despite the positivity in the market Mr Whitelaw said he didn’t think canola futures would break through the $1000 a tonne mark like was achieved in 2021.

Australian Oilseeds Federation chief executive Nick Goddard

Australian Oilseeds Federation chief executive Nick Goddard said it was likely Australian growers would deliver a larger crop than initially anticipated.

He said the higher yields combined with the fact prices were likely to be sitting at a premium boded well for the crop.

“Globally, the Canadian and US crop is feeling the brunt of the hot weather,” he said.

“This gives Australian growers an opportunity.”

He said Australian growers had an estimated 3,204,000ha planted this season, which was back from 3,596,000ha last year.

“We saw some late seeding in Western Australia,” he said.

Victorian producers have planted 598,000ha, compared to 601,000ha last year.

Ashley Fraser of Baker Seeds at Rutherglen. Picture: Yuri Kouzmin

Ashley Fraser from Rutherglen said canola still had a way to go yet in terms of the season.

“Maturity-wise, we are two to three weeks later than last year,” he said.

Mr Fraser said canola was an expensive crop to grow, and any price uplift would be welcome.

“If we can achieve prices in the mid $700 a tonne range and yields of two tonnes a hectare, the crop is worth growing,” he said.