CANOLA prices have been unable to lift in the past week, in spite of positive news in terms of European Union (EU) government policy as a massive international crop weighs heavily on the market.
The market was optimistic that news from the EU that it will raise anti-dumping duties on biodiesel from Argentina and Indonesia would spark oilseed values.
In the first session of trade on the key French futures exchange, MATIF, there was a 3pc rally in European rapeseed (canola) values, but that has quickly been given up.
Lloyd George, AgScientia, said Australian values had ended last week down a dollar a tonne, after earlier rallying $15/t.
“The EU news is supportive on the surface, but even with that, canola prices were still easy," Mr George said.
“I think the StatsCan announcement they are raising Canadian production estimates to 16 million tonnes had as big an impact on the downside as the EU news did in bringing prices up.
“The facts are there’s a lot of oilseeds about, the EU has had a big crop, Canada has had a record crop and I think we’re in for a bigger year than expected here in Australia.
“The cool finish and good spring rain will mean there should be some very heavy yields to compensate for slightly lower acreage.”
Lachie Stevens, Lachstock Consulting, said the EU announcement would put a floor in the market rather than provide a price spike.
“It's not going to push prices up too much, but it is certainly supportive for oilseeds.”
In particular, he said the sentiment shown by the EU showed a likely continuation of support for biofuel.
“Everyone was worried regarding EU policies and austerity measures, there were some EU members who wanted biodiesel support cut back, so this at least shows continued support of the policy,” Mr Stevens said.
Malcolm Bartholomaeus, Bartholomaeus Consulting, said the bigger European and Black Sea crops meant Australian canola would not have crucial demand out of Europe.
“There are big crops in the EU, and even if they need more, there are supplies in Ukraine, which is much closer than Australia," he said.
“On the flip side, the Australian crop will be smaller, and China has opened up for Australian canola exports, so there will be a different dynamic here this year.”