STRONG canola prices sweetened by bonifications paid for high oil content continue to see Australia’s major winter oilseed as the cash favourite for growers selling at harvest.
Often the practice, it is being encouraged by values which have largely held above $600 per tonne on a delivered-port basis throughout the growing season.
Supporting the market is solid demand from exporters accumulating cargoes to sell into a tight global oilseed complex, and domestic crushers covering their annual requirements.
Activity is centred in New South Wales, where harvest of the biggest crop since 2016 is now around one third through.
In Western Australia, new-crop canola exports started last week with a cargo bound for The Netherlands via South Africa, and a string of others bound mostly for Europe are to follow.
Some market support from Asia and the Middle East is also expected.
Early export focus
China’s volume buying of US and South American soybeans has been the biggest driver of strength in the global oilseed market.
As futures values have continued to climb, Australian basis has softened under sell-side pressure, leaving the bid to growers little changed.
Exporters chasing canola grown under Sustainable Grains Australia guidelines are currently posting the strongest bids at major NSW rail sites as they look to accumulate cargoes for nearby shipment to Europe.
NSW exports will kick off out of Port Kembla next month, and the South Australian and Victorian programs are expected to start in January.
The national crop now being harvested is seen by the Australian Oilseeds Federation at 3.34 million tonnes (Mt), and industry expects almost half that will be exported.
Return to normal
Among the domestic market participants is MSM Milling, which crushes around 110,000 tonnes of canola per annum at Manildra in central west NSW.
It exports about 30 per cent of its oil, and sells the balance plus meal domestically.
MSM Milling procurement manager James Dellow said the operation had had to source canola from as far afield as Victoria in the past two drought-affected seasons, but this year would be purchasing the vast majority of its canola from within a 200-kilometre radius of base.
In line with industry practice, growers delivering canola with oil content above 42 per cent receive bonification.
In Victoria, some early deliveries have hit 50pc oil, and Mr Dellow said MSM Milling had seen up to 47pc in its catchment.
“It’s been a very good run up until now.”
Mr Dellow said test weights, as measured in kilograms per hectolitre, had also been good.
“They are 70kg test weights coming in, which is very good, but yield is the real winner.
“People are doing up to 4t per hectare.”
Mr Dellow said many growers west of the Newell Highway were reporting pleasing average yields of 2-2.5t/ha.
“Growers are seeing base prices of $560-$570/t, and yields of 2-3t/ha.
“If they’re delivering 47pc oil, they’re paid bonification of around $40/t for a 7.5-per-cent bonification, so it’s a good earner.”
Extra storage opens
Mr Dellow said some early crops from north-western NSW had oil contents of 37-40pc to reflect its drier growing season, but as harvest rolled south, most oil content was coming in at 42-47pc.
“We started this harvest with canola from Coonamble five weeks ago, and we’ve just opened the Cumnock silos.
“That will give us surge capacity”.
The site is owned by GrainCorp and has just been leased to MSM Milling to provide it with extra capacity as the canola harvest moves east and south.
In the far south of NSW, Godde’s Grain trader Peter Gerhardy said the canola harvest was “going flat strap”.
“We’re seeing $560-$570/t depot for canola, and with 44-46pc oil, prices to growers are not far off $600,” Mr Gerhardy said.
“We’re seeing 3t/ha as a reasonably common number for yields, down to about 2.5t/ha.
“That’s giving growers a brilliant return.”
Pause in harvest
With a La Niña weather event now in play in eastern Australia, Mr Dellow said growers with canola to harvest were not going to oversell tonnage because they were fearful of losing yield to hail.
Mr Dellow said one grower near Parkes had been assessed with an 80pc loss to hail, and other crops had lost 30-40pc but still averaged a yield of 2.9t/ha.
“There are definitely hail losses out there.”
Patchy rain in the 24 hours to 9am yesterday over parts of central and southern NSW has slowed or stopped harvest for some growers.
Mr Dellow said growers with harvested canola had become keen sellers after limited forward sales throughout the growing season based largely on concerns about in-crop rainfall cutting out.
“We were lucky to see growers 10pc sold, but the minute they got it in the bin, they’d sell maybe 200t, and look to do the same again.”
Grain Central: Get our free cropping news straight to your inbox – Click here