Cropping

Rain, strong prices boost outlook for big canola area

Liz Wells, March 24, 2021

 

This crop of Hyola970 is off to a strong and early start at Wallendbeen in NSW. Photo: Growmore Agronomy Services

SOAKING rain across south-eastern Australia in the past week and strong canola prices are expected to prompt a lift in Australian canola area, with planting now under way for dual-purpose varieties.

Even prior to the rain, seed companies were reporting very strong early sales as growers in New South Wales looked to follow last year’s massive post-drought wheat and barley planting with a broadleaf.

Supporting canola as the crop of choice for many is its ability to be grazed during winter, the full or near-full subsoil moisture which gives the green light to early planting, and continued strength in the global oilseed complex.

Positive market signals

In its Canola S & D Report released 16 March, Lachstock Consulting said the global appetite for Australian canola appeared to be growing, with April-June cargoes heading for Bangladesh, Japan and the United Arab Emirates as well as its traditional volume market, Europe.

Ukraine’s aggressive export sales campaign late 2020 now has it importing canola, tipped to become a first-time destination for two or three non-GM Australian canola cargoes in coming months as shipping stems take shape.

“Ukraine exported its crop to Europe early in the campaign, and with a poor sunflower crop and a very tight sunflower-oil market, is now being forced to flip around as an importer and for the first time it appears non-GM Australian seed will make its way to the Ukraine,” the report said.

Lachstock said this diversion of Australian seed to non-EU destinations reduced the supply available to Europe ahead of its new crop.

“We have a lot of TBAs on the stem, but anecdotal feedback is that we are seeing non-EU business coming.”

Since this time last year, the indicative Lachstock APW delivered Melbourne wheat price as published on Grain Central has fallen 24 per cent, while the canola price has fallen only 9pc.

Woodside Commodities broker Hamish Steele-Park said Australia’s new-crop canola prices were being supported by high EU values.

“The EU is expected to import significant amounts of canola again next year.

Mr Steele-Park said the better bids for new-crop were for sustainable canola which the EU demands.

“Good crush margins supportive oilseeds markets worldwide.

“High prices and a wet autumn start will encourage a large canola plant this year in Australia.”

Europe is widely tipped to import more than 2 million tonnes of canola from Australia in the current marketing year, with the loading program already in full swing from Port Kembla in the east to Albany in the west.

Winter varieties in demand

Advanta Seeds national canola technical manager Justin Kudnig said the company had already seen a dramatic increase in demand for dual-purpose winter varieties, which he expected would increase by around 10pc on last year.

“The majority of that will be on the east coast on the back of rainfall, and on price,” Mr Kudnig said.

“Our sales have gone up to reflect that.”

Mr Kudnig said at least 100,000 hectares of winter canola had already been sown since February, which meant around 5pc of the forecast national total canola area was already in the ground.

“Five years ago, those winter crops were less than 1pc.

“We think winter canola area will get to 10pc of the Australian crop in five years.

“The increase has got to do with sheep prices, and growers looking for an alternative to wheat and oats for grazing, and for disease and weed control.”

Lachstock has also noted the swing to GM.

“We are also seeing the GM seed market share continue to grow across many areas,” it said in its latest report.

“This will be the first year it is commercially allowed to be produced by farmers in South Australia and our reports suggest we can expect 10-per-cent market share.

“Rainfall in NSW is looking good and the price versus wheat is improving.

“We do see some potential for more area to go in across NSW if the break in autumn is favourable, but seed availability is a limiting factor in many places right now.”

CANOLA hectares
5yr avg to 2019-20 2019-20 2020-21 ACF 2021-22
Qld 1,000 2,000 2,000 0
NSW 574,000 250,000 550,000 590,000
Vic 389,000 385,000 450,000 480,000
Tas 1,000 1,000 1,000 Nq
SA 199,000 220,000 225,000 340,000
WA 1,211,000 950,000 1,150,000 1,250,000
Aust total 2,375,000 1,808,000 2,378,000 2,660,000

Table 1: ABARES estimates for area in hectares in five years to 2019-20, 2019-20 and 2020-21, and Australian Crop Forecasters initial estimates for 2021-22.

CANOLA tonnes
5yr avg to 2019-20 2019-20 2020-21
Qld 1,000 1,000 1,000
NSW 713,000 225,000 1,073,000
Vic 604,000 650,000 950,000
Tas 3,000 3,000 3,000
SA 296,000 300,000 375,000
WA 1,519,000 1,150,000 1,650,000
Aust total 3,136,000 2,329,000 4,052,000

Table 2: ABARES estimates for Australian canola production in tonnes.

Expansion in NSW

PY Agronomy principal Peter Yelland said canola area in the central west of NSW was likely to be similar to last year in the Parkes region, but recent rain to set up an early planting could well see area rise in areas north and west.

Registrations in the week to 9am today in NSW’s main canola areas have mostly been between 50-180 millimetres, ideal for early planting and establishment of canola.

“East of the Newell Highway, dual-purpose canola is becoming a pretty big thing, and that would be planted now,” Mr Yelland said.

“The primary reason is the grazing value, and the areas are getting larger and larger each year.”

Growers on the outer slopes and plains of NSW will generally plant grain-only canola in the second half of April.

“Those two weeks in April are usually fairly hectic for canola, and will follow dual-purpose cereals going in from now, and then pulses.”

Mr Yelland said prices for non-GM and GM canola looked attractive, and only off-spec GM could be difficult to place.

Gilgandra Ag N Vet agronomist and branch manager Paul Purvis said demand for canola seed for planting had been high on the back of good prices from last season which appeared to be holding.

“Seed demand has been very high, and dual-purpose canola varieties ran out very quickly,” Mr Purvis said.

General and soaking rain across just about all of NSW’s growing areas has been most welcome, but will make control of weeds even more of a challenge.

Clearfield varieties are non GM and can tolerate non-glyphosate herbicides which control grass and broadleaf weeds.

Mr Purvis said Clearfield varieties had been highly sought-after in this season where successive rain events since last spring had made weed control difficult.

“A lot of people didn’t get good in-crop control in cereals.

“They will have a weed burden continuing and that’s the problem.”

Mr Purvis said canola was a runaway success for growers last year, and districts like Nyngan that often struggled to achieve average yields of 1.5 tonnes per hectare last year got 3t/ha.

“People made good money with canola, and it’s a great break crop, especially with a pulse in there too before you go back to wheat.”

GM change to lift SA

In all cropping areas of South Australia bar Kangaroo Island, growers are now able to grow GM as well as non-GM canola.

This is expected to lift SA’s canola area, and brings SA into line with other mainland states which have for many years been able to grow GM and non-GM canola.

“In SA, we’ve seen strategic interest by growers to look at new Truflex to see how it performs, and see how its gross margins stack up against non-GM canola and other crops,” Mr Kudnig said.

Following consultation with growers, SA’s major bulk handler Viterra has announced that seven of its 53 grower-receival sites in the state are planned to be open to GM canola for the first time this harvest.

The sites are: Edillilie and Tumby Bay on the Lower Eyre Peninsula; Ardrossan on the Yorke Peninsula; Port Pirie, and Bordertown and Coonalpyn in the Murray-Mallee.

Victoria mostly steady

As with SA, lentils as well as canola loom large in the cropping rotation, and with lentil prices also reasonably strong, Victoria’s canola area is not expected to increase much, if at all, this year.

Lachstock said in southern Victoria, GM canola area was continuing to grow at the expense of non-GM and specialty varieties due to agronomic factors, and early price indications of a relatively narrow GM versus non-GM discount for 2021-22.

This looks like being $20-30/t versus $50-60/t which has been seen at times in previous seasons.

Upside for WA

Grain Industry of Western Australia (GIWA) said in its latest crop report that area planted to canola in WA was likely to rise this year if an early break to the season arrived, or significant summer rain fell.

Parts of WA have had good rain, but seed availability is a limiting factor.

“We’re hearing that there is quite a bit of canola going in in northern WA where they’ve got good soil moisture from February rains,” ACF manager insights James Maxwell said.

 

 

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