What’s causing canola’s major price slide?

Canola prices have fallen below $600 a tonne in the past week in a stark contrast to $1000 a tonne two years ago, giving growers “serious concerns”.

Canola prices have fallen below the benchmark $600 a tonne this week in contrast to the record values of $1000 a tonne in 2022.

A combination of big yields and pressures from overseas, including the conflict in the Red Sea, are being blamed for the gloss coming off prices.

Traditionally farmers look for values of more than $600 a tonne to make canola viable. In July 2023 prices were tracking at $775 a tonne.

There are estimates that up to 20 per cent of the crop could still be in storage at depots or on-farm, with farmers hopeful of a price reprieve.

Australian Oilseeds Federation chief executive Nick Goddard said supply and demand was at play and there had been large-yielding crops for consecutive years.

The 2023 crop was 5.2 million tonnes and followed the record result of 8 million tonnes in 2022 with an estimated value to the industry of $6 billion.

Mr Goddard said 18 months to two years ago there was a world shortage of canola and the low supplies attributed to prices climbing above $1000 at the time.

He said the adage that “nothing eases high prices like high prices” could be applied to the current canola market.

Rob Gollasch at Wallacetown in southern NSW is pictured with his spray rig Picture: Nikki Reynolds

Southern NSW farmer Rob Gollasch of Wallacetown will plant canola in his winter crop rotation, along with barley and lupins.

He said the prices were discouraging at the moment but he wasn’t convinced they would stay at this level.

“They could go up again later in the season,” he said.

Mr Gollasch said he would stick to the rotation and continue to grow canola with sowing set to start in April.

Key Agri Services director and grain trader Ben Shannon from Gundagai in southern NSW said up to 15 per cent of canola from 2023 harvest was still unsold.

And there was carry-over from the 2022 crop too.

Rob Gollasch at Wallacetown in southern NSW is pictured with canola seed. Picture: Nikki Reynolds

“There are some serious concerns among growers and they are not wanting to engage in the market when the prices are below $600 a tonne,” he said.

Mr Key said given canola was considered a costly crop to grow he could understand why farmers were opting to hold onto it and wait for prices to improve.

“I think we will see growers look at their planting intentions in autumn and may juggle around some crop rotations or try something different depending on where the price is in the next couple of weeks,” he said.

Mr Shannon said it was possible canola prices may fall further to settle around the mid $550 a tonne range.

In the past week he had witnessed some small rises for prices of $600 to $605 a tonne but said it was short lived with quotes of around $580 to $590 a tonne at the moment.