Rapeseeds: Belgium Bonds With Australia Closely


Apr 14, 2023 | Agricultural Markets News

Reading time: 2 minutes

FAS/Canberra forecasts Australia’s Canola production to decline significantly to 4.7 million metric tons (MMT) in marketing year (MY) 2022/23. If realized, it still achieves the second largest crop ever, following an estimated record-breaking 6.35 MMT in MY 2021/22. This crop smashed the previous production record, set in MY 2020/21, of 4.5 MMT by over 40 percent. Although soil moisture conditions in the Canola growing regions are generally good and prices are very high in the lead-up to sowing, there is an expectation that the planted area will be reduced. This is because farmers have a less suitable area available in their crop rotations for Canola after the previous two years of the big planted area.

In addition, the three major input cost items of fertilizer, chemicals, and diesel have skyrocketed in recent months. The supply of some of these items is also proving to be challenging. Area for Canola is forecast to decline by 10 percent to 2.7 million hectares (MHa) from the previous record production-breaking season of 3.05 MHa. The forecast area is still 110,000 Ha above the last 10-year average and above the previous 5-year average. Yields are also forecast to decline by 16 percent from the record set in MY 2021/22 but remain 18 percent above the last five-year average.

Canola is typically planted from March to May and harvested from October to December. The more northern production areas generally have earlier planting and harvest compared to the more temperate climate in the southern areas. As planting time approaches, most Canola growing regions have average to above-average soil moisture this year, especially in the eastern growing regions. Of the major winter crops, wheat and barley have lower production risk and input costs than Canola. But with good soil moisture and the backing of the previous two years of solid winter crop production and price results, this will allow growers to optimize their returns by taking a degree of risk with large Canola planted area in MY 2022/23.

In Western Australia, soil moisture conditions are not as favorable as Eastern Australia, and Western Australia accounts for nearly half of Australia’s total production. Because of its importance in overall production, any variance in planting and yield in Australia substantially impacts national Canola production. Due to generally sandy soils in Western Australia’s Canola-growing region, soil moisture in the lead-up to planting is not as crucial as rainfall around planting and in-crop rains. Farmers in Western Australia will be somewhat encouraged by the forecast of an average chance of exceeding median rainfall over the April to June 2022 period during planting and early growth stages of the crop.

A further key positive towards the forecast crop production is the very high prices currently available for Canola. Since the start of 2021, the Canola price has risen by around 60 percent, with the peak price even higher. After prices started to decline around harvest from mid-October 2021, they began to rally from mid-February 2022, leading up to the Russian invasion of Ukraine. Futures prices for late 2022 at harvest for Australian producers are currently strong relative to historical prices.

Rapeseeds: Belgium Bonds With Australia Closely

Australian Canola Export

As per AgFlow data, Australia shipped 255,000 tons of Rapeseeds to Belgium in Jan-March 2023, followed by Egypt (220,000 tons), Singapore (115,000 tons), Japan (101,000 tons), Germany (60,000 tons), and Portugal (60,000 tons). MY 2022/23 Canola exports are forecast to be 3.6 MMT, a 1.2-MMT decline from the upward revised estimate for MY 2021/22. This forecast decline is mainly due to the anticipated lower Canola production after the record-smashing result in MY 2021/22.

Other sources: USDA

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