Canola shining bright

Canola shining bright

Cropping
Canola crops are podding up nicely in key production areas in Australia, which will allow growers to take advantage of the high prices currently on offer for the oilseed.

Canola crops are podding up nicely in key production areas in Australia, which will allow growers to take advantage of the high prices currently on offer for the oilseed.

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Canola prices have kicked more than 10pc in the past three weeks on the back of increased demand.

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IN A YEAR where depressed cereal prices have dominated the conversation in the Australian grains industry canola has emerged as a shining light on the price front with prices lifting more than 10pc this month to $535 a tonne.

And in further good news, one private forecaster has pegged the Australian canola crop at potentially over 3.5 million tonnes, which will be one of the largest crops of all time.

Jon Slee, Australian Oilseeds Federation (AOF) president said prices were around $535/t at port exclusive of costs.

“The canola sector has slightly different price signals than other grain complexes and that oil component in terms of pricing has been a big help this year.”

Mr Slee said worldwide demand for edible oil was providing strength to the market.

“There is strong demand for oil, which has provided canola with a real rally of late.”

Dominic Cook, market analyst with easyMarkets, said Australia was poised to cash in on the solid canola price.

“We think the canola crop could be around 3.5 million tonnes, possibly more,” he said.

“It is all a little unknown as we don’t know how much yield will be lost in NSW due to excess moisture, but there will be average yields in WA and parts of Victoria and South Australia should be very good,” Mr Cook said.

He said canola prices had rallied over 10 per cent since the end of September, with strong demand out of China.

“China previously had been playing hardball with exports from Canada surrounding assurances on the level of the fungal disease blackleg in the consignments but they have since relaxed those restrictions,” Mr Cook said.

“Chinese domestic production was not as strong as they had hoped so there is good demand for canola from Canada which is supportive of the price.”

He said Australian canola mainly went to Europe, but added there may be a chance to do business with China this year.

Mr Slee said canola was currently competitive against other sources of edible oil, such as palm oil.

“Canola is price advantaged at present and that gives us a chance to get into some non-traditional markets.”

He said the situation had reversed since early in the year where there was better money in the protein side of oilseed crops such as canola and soybeans.

“Back in May it was all a protein story and all about soybeans, which have higher protein and lower oil levels than canola, that has all turned around, mainly due to a shortage of palm oil.”

While palm oil supplies would become competitive against canola oil if prices lifted further, Mr Slee did not think prices would fall markedly from current levels.

“I’d anticipate a sideways market, we could see prices move $30/t either way but I doubt we’ll see further big moves as the big production areas are finished, we know the size of the Canadian canola crop, we know the size of the US soybean crop.”

“The South American soybean crop and its progress tends to have more of an influence in December and January.”

Mr Slee said Australia was not only exporting raw canola seed but also oil and meal.

“We’ve had good demand for oil from south-east Asia and  meal is going to Indonesia and Vietnam.”

Mr Cook agreed that Australia may push into new markets this year.

“The relative shortage of canola means a chance to look at some interesting new markets.

“India for example may be an opportunity, there is strong demand for edible oils through the period of Hindu festivals that occur late in the year.”

The story Canola shining bright first appeared on Farm Online.

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