Sweating the yellow stuff
By Sam Reichstein
Specialty Canola Product Manager
It’s crop walking season where growers, agronomists and merchants head out into the field to inspect the conditions of crops, review relative performance of cultivars and consider production techniques that may give a crop an extra edge. The crop in focus today is canola as the yellow stuff shoots up to flower and the team has been criss-crossing the state to get a better picture of how the season is playing out in the paddock. What did they see? For starters, highly variable conditions with resultant variation in crop conditions. In the Central West, crops that were established early that had previously looked alright, are starting to struggle with a lack of moisture, warmer day time temperatures and the drying effects of frost. Consideration is turning to cutting for hay or grazing. South of Forbes, crops were found to be hanging on but unless rainfall is imminent, similar considerations may be given to salvaging value as those further north. Further south in the state, crops are still looking good although follow up rain is needed. The Bureau of Meteorology has forecast a drier than average spring which is unwelcome news for all of us.
It’s a different story in the southern states with very favourable crop conditions persisting in Victoria and South Australia. With current high soil moisture levels and the crop coming up to flower, it is difficult to see the crop failing from here, even with a drier forecast spring. Across the Nullabor, Western Australia’s slow start to the season has improved considerably. So what does this mean for markets? Current canola markets remain steady and despite trading above export parity, there is little activity with few sellers willing to come to the market. There is a dance going on between the states, where New South Wales is trading approximately $30 above Victoria and with little happening on domestic markets, most of Western Australia’s non-GM canola surplus is going to Europe, as per usual, where the market is stronger due to drier conditions and some general tightness in stocks. Surplus GM canola continues to flow from Western Australia to the east coast or to homes in overseas markets.
There is no doubt the fundamentals for growers to produce canola remains extremely solid. Crop walks are not only an insight into what can be expected from the season and what can learn, they are also a barometer for sentiment and the sentiment for canola continues to be strong. The GRDC has recently reported that top growers who successfully utilise high gross margin crops like canola in their rotations tend to be more successful in the long run. In addition, new technology and varieties like VICTORY® canola continue to provide benefit in terms of premiums for speciality oil in demand by the food sector. Additional commercial options for growers like provisions to return seed if the season stays too dry to plant and lower cost hybrid seed options, help to provide new ways of managing risk and offset some of the higher costs associated with growing canola.
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