Canola Prices Rally Amid Global Factors
By Chris Johnson
25th March, 2024
Last week we saw more canola sellers come out of the woodwork as prices continued to rally for canola, recovering to levels not seen since mid-November. A number of factors contributed to the rally, fueled by Stats Canada reporting a 3% decrease in expected planted area, Coceral in Belgium estimating a reduction in UK-EU production by 1mmt, and some adverse weather striking Brazilian and Argentine soy crops. Local South American analysts are continuing to call production much lower than the production currently estimated by the USDA in their most recent report also adding some support. While the International Grains Council, is still forecasting healthy oilseed production for the 24/25 season, Friday’s prospective planting report from the USDA will set the scene on American soy production. With drought conditions worsening, some are forecasting a reduction in area, which will likely continue to support prices. Local new crop canola prices have been stronger, but the grower has been reluctant to start selling prior to the crop being planted.
Sorghum harvesting was interrupted earlier in the week with showers persisting over Northern NSW, Southern QLD and the Downs. With the bulk of the crop to be harvested in the coming weeks, any rain continues to benefit the later crop without causing serious quality issues for the grain soon to be in the bin. The $10-20/mt premium to deliver sorghum to both Downs and Liverpool Plains packers continues to draw tonnes, but their capacity to handle tonnes off the header once the bulk of harvest starts will be their biggest challenge and put pressure on prices being paid. Cheap Black Sea, and Brazilian corn are keeping a lid on bulk sorghum exports from Australia.
Whilst international wheat markets rallied last week, local prices have continued to struggle. Russian aggression in the Black Sea, and late frost and snow forecast across parts of the US have done little to help push up prices locally. Feedlots on the Downs are increasing their numbers, but they continue to be well covered for any prompt requirements, with some buying interest starting to come to the market for May/June and onwards delivery.
Barley followed a similar story to wheat, with feedlots comfortably placed locally into the May/June delivery period, we saw some trading around the $365 delivered Downs feedlots last week. UK-EU production is forecast to rise for the 24/25 season, but Barley out of France, our biggest export competitor is forecast to decrease. Prices may be supported if China comes looking for some Australian barley in the near future.
New crop planting is just around the corner, with most across the east coast having a better than average moisture profile, a reasonable fall of rain to get things started over the next couple of weeks, should see planting start in earnest. It seems the mix from the Plains north is set change a little, with some canola area, lost to the late sorghum and mung bean plantings, while high prices for last year’s chickpeas likely to see them put into the rotation as this year’s break crop of choice.
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