AUSTRALIAN canola producers are still on track to generate record revenue from the 2012 crop, in spite of yield losses from frost damage and a slight dip in canola values.
The Australian Oilseeds Federation (AOF) still has its estimate at 2.69 million tonnes, however other analysts believe that larger than expected losses to frost may see a figure slightly below this.
However, even accounting for a figure up to 200,000 tonnes lower than the AOF number it will still be comfortably the second biggest year of canola production in Australia after last year’s bumper harvest.
On the pricing front, farmers were alarmed earlier in the month when prices began to fall markedly in a pattern similar to last year, when prices plummeted during the Australian harvest, however values have consolidated over the past week at a range between $550 and $560 a tonne port.
ProFarmer commodity analyst Malcolm Bartholomaeus said frost was a major story this year.
“Both the central west in NSW and the SA Mallee have been badly impacted by frost.”
In other areas, he said yields were reasonable, but he said oil levels were slightly lower than expected.
“Its only a slight trend, but overall you’d say oil levels are lower, rather than higher.”
GrainCorp corporate affairs manager Angus Trigg agreed, saying there was a small swing towards lower oil levels.
Sturt Grain general manager Tim Burrow said the SA harvest was close to expectations, although yields did not quite meet grower expectations in many cases.
Unlike on the east coast, he said oil levels have been slightly better than expected.
In terms of marketing, he said most growers were looking for values in excess of $550/t before selling.
With feed grain values relatively strong, he said many growers were selling barley to generate cash flow, while holding canola.
Mr Bartholomaeus said he felt the canola market had steadied in the past week.
“Even though its fallen, it is now at a considerable year on year premium to last year, where it went right down to $485/t.
He also said east coast values, which had traded at a discount to SA prices over the harvest period up until now, had also caught up to the bids in SA this week.
“The Geelong and Port Kembla prices are not looking too bad now.”
Mr Trigg said there was a strong shipping program booked in through GrainCorp’s ports, with demand coming from Europe and Pakistan in particular.
Mr Bartholomaeus said the international oilseed complex had more exposure to macro economic factors, such as concerns surrounding the US ‘fiscal cliff’ and European debt issues than either wheat or corn, but said there was some positive fundamental news emerging.
“Canadian farmers are not selling their canola, they can see the supply and demand sheet getting tighter.”
He said although the high values had encouraged a record canola crop in Canada, it was not as large as initially thought.
It is a similar case in South America – where the soybean crop will be big, but maybe not as big as expected.
“It’s too dry in Brazil and too wet in Argentina,” Mr Bartholomaeus said.
However, in spite of this, he still forecast a big South American soybean crop and said Australian growers would see the best opportunities for canola prior to February, barring a major production issue in South America.
On the consumption side, a lack of Chinese crusher demand for soybeans was largely responsible for the fall in soybean prices, but Mr Bartholomaeus said now the Chinese were looking to buy soy oil, which was also supportive of pricing.
AOF executive director Nick Goddard said in spite of the frost damage it was a good year of consolidation for the canola industry.
“In the Port Kembla zone, there have been a lot of reports of good yields, and overall the quality has been reasonable, with no issues with test weight or sprouting.”