East coast canola shortage looms

East coast canola shortage looms


Cropping
Failing canola crops on the east coast mean crushers will look to source supplies from interstate and potentially even overseas this season.

Failing canola crops on the east coast mean crushers will look to source supplies from interstate and potentially even overseas this season.

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Canola stocks on the east coast will be tight this year, to the extent the prospect of Canadian imports is being floated.

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THE EXPECTED dearth of canola on the east coast could see metropolitan crushers investigating the possibility of importing canola seed from Canada to keep processing plants going.

Nick Goddard, Australian Oilseeds Federation (AOF) executive, said while his organisation had not updated its 2018-19 production estimate numbers since July, the 2.66 million tonne crop forecast then was now a pipedream.

He said he expected further cuts to production on the east coast in particular.

“There was a lot of crop planted in places like Victoria and southern NSW that will now be cut for hay and not taken through to grain so that puts further pressure on production,” Mr Goddard said.

“Further to that I am hearing reports of frost damage over the past week so there is considerable downside.”

In terms of the footprint of where the canola will be located this year, Mr Goddard said Western Australia was likely to produce over half the nation’s canola.

“We’re looking at by far the bulk of the production coming from Western Australia and to a lesser extent South Australia.”

With the scarcity of canola on the east coast Mr Goddard said he expected east coast crushers would be casting the net further afield this year.

While Western and South Australia will be the obvious targets he said it would not surprise if international canola was looked at.

“Oilseed prices internationally are not that high, it is strong domestic basis keeping the price up, so you can look at product from somewhere like Canada and make the sums work.”

Basis levels for east coast canola are currently about $150 a tonne above international values, with prices of $600-630/t.

Mr Goddard said, similar to feed grain, getting approval to bring canola upcountry would be a process, but said it had been brought in for use by crushers with facilities near a port before.

“In 2006 we did see Canadian canola come in, if they can get the stocks in from other parts of Australia they will probably do that but in terms of the financial considerations, before you worked out the v various permits required, bringing in international canola could stack up.”

Pricewise with canola around $600 a tonne delivered port farmers are weighing up their options.

The current price is a historically high quote, but based on the normal rule of thumb where farmers want canola to be around double the price of cereals it is not as expensive comparatively as the cereal market, where there are values of $400/t or more at present.

Farmers said this consideration meant that in some cases cutting canola for hay was more attractive than relying on uncertain grain yields.

Lachy Herbert, ROBE trading manager, says while canola supplies on the east coast will be tight, areas such as Victoria's Western District will still produce crops.

Lachy Herbert, ROBE trading manager, says while canola supplies on the east coast will be tight, areas such as Victoria's Western District will still produce crops.

However, Lachy Herbert, trading manager for Wagga Wagga based Riverina Oils and Bioenergy (ROBE) said there would still be canola available on the east coast.

“It is going to be a matter of casting the net wider for supplies, that’s for sure, there definitely have been crops in the Riverina cut for hay, but equally there will still be some parts, be it higher rainfall zones of NSW or Victoria’s Western District where there is canola available, and there is also a surprising amount of carry-out.”

“We could also see a situation like last year where late rain generates extra canola yield from crops that don’t look that fantastic.”

He said his upcountry facility would look to get supplies domestically but said the sums could work for metropolitan crushers.

“There is the paperwork to work through but it is possible.”

However, he said Western Australia would be the first port of call.

“The supply chain is pretty well set up and we believe WA can pull the trigger on 100,000t a month to come over here if the market wants it.”

Meanwhile, feed users who often utilise the canola meal that is a byproduct of the crushing process in their rations are looking at bringing in extra tonnages of soy meal as a substitute.

Australia is always a net importer of soy meal however industry speculation is that imports may be significantly higher this year.

The story East coast canola shortage looms first appeared on Farm Online.

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