Growers eye high canola prices but say it’s too risky to forward sell
New-crop canola prices have surged, but dry conditions and production risks have growers saying they are reluctant to sell.
New-crop canola prices have surged to $820 a tonne — up $50 on this time last year — but growers say it’s too risky to forward sell.
The dry seasonal conditions have taken a toll on the oilseed crop in Victoria and southern NSW, and farmers are reporting instances of either no crop, patchy germination or cases of having to resow.
Market Check chief executive officer Nick Crundall said you could put $1000 a tonne in front of growers right now and it wouldn’t entice them to forward sell in Victoria.
“The production risk is just too high ... we have seen zero interest in forward selling canola in Victoria,” he said.
The recent rain in NSW has helped to inspire a small amount of grower confidence in that state but the unknown outcome of the season was still a concerning factor in Victoria and South Australia.
“There is a lot of demand, prices are healthy, and they are at a premium, you could say we are $50 to $100 tonne better than this time last year,” he said.
“And offshore, the market is trading at $50 a tonne higher too.”
The better prices are attributed to low global supplies and a tight balance sheet for the oilseed crop.
Mr Crundall said his advice to anyone seeing the current prices was to be careful and to consider their production risks.
In addition to new-crop prices, farmers have been taking advantage of selling old crop or canola that was stored on farm.
Prices for that crop were trading at a rate of $10 to $20 a tonne less than the new-crop quotes.
The total area planted was also something that was being questioned, with traders tipping the hectares could be down by as much as 10 per cent.
In the recent Rabobank crop report, the area of canola across Victoria was forecast to remain stable. Figures from the Australian Bureau of Agricultural and Resource Economics and Sciences stated the planting area was 520,000ha for an average yield of 1.73 tonnes a hectare, amounting to a production of 900,000 tonnes.
Western District farmer Andrew Nagorcka said canola was his worst winter crop this year for establishment.
“As we speak, we are resowing another 80 hectares because it was either lost or died because of the dry weather or was damaged by birds,” the Hamilton farmer said.
“The season is tough all around, and I have looked at canola prices myself, but I am not confident in forward selling.”
In previous years, Mr Nagorcka said he had forward sold at this time of the year.
“We would often forward sell even a percentage before planting, but this year we can’t,” he said.
In addition to canola, he also has wheat, which was just starting to emerge now. Beans had been sown too but progressing slowly, while barley was coming through well.
His region has had 18mm of rain in the past seven days, which was welcome, but it was still considered dry overall.
At Balliang, farmer John Griffith said he hadn’t planted canola yet but was still aiming to try and sow some.
“We usually have canola in the rotation,” he said.
“It will be really late for us to sow, but we just needed some rain.”
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