Mecardo Analysis - Canola is on a knife-edge
- By: "Farm Tender" News
- Cattle News
- Jul 09, 2019
- 552 views
- Share
This article is bought to you by Entegra Sheds.
By Andrew Whitelaw | Source: USDA, ABARES.
As is generally the case with rain in Australia. There have been haves and have nots. The rainfall throughout most of the southern part of the country has been beneficial, but much of it came quite late. Although much of the interest has been in wheat – what about canola?
Ad - Make you next Shed an Entegra Shed - The best in the business - Ad
At this point it is always worthwhile examining crop forecasts with a pinch of salt. There is still a long way to go and the season could turn to mud or to dust. ABARES released their estimates of the canola crop in early June. The data shows a considerable increased volume year on year, however from a low base its largely irrelevant.
The combined NSW/VIC canola crop is forecast at 1.07mmt, a rise of 618kmt. However, this falls well below the average for previous decade at 1.6mmt. After a poor year in 2018/19, the pantry will be close to empty by the end of the season.
When we look further afield into the other major canola (or rapeseed) production areas of Canada and the European union (figure 2), we can see that production is largely unchanged year on year. Canada in recent years has grown to become an extremely important producer with volumes up almost 10mmt since the turn of the decade.
Although Canadian exporters are currently in dispute with China over import permits, they are still (according to USDA) likely to plant a similar sized crop to last season.
Ad - Make you next Shed an Entegra Shed - The best in the business - Ad
Ad - Make you next Shed an Entegra Shed - The best in the business - Ad
At a global level the oilseed sector is liable to come under some pressure, especially soybeans due to the reduction in demand for meal. However, at a local level crush facilities in NSW/VIC are going to be under pressure to accumulate the volumes required for their production needs.
Key points
* Canola production is forecast to be up considerably year on year, but well below the decade average.
* Globally production of canola is largely unchanged.
* The canola market in Australia will largely be domestically driven this year.
What does this mean?
Although still early in the season, there is a reasonable likelihood that Southern Australian canola will be required domestically this season in VIC/NSW. If the season turns for the worst, transshipments from the west will be likely.
For a second year in a row the primary driver of canola pricing will be domestic rather than international factors.
Share Ag News Via