April 24, 2012

 

Australia's 2012-13 rapeseed production up on favourable weather

 

 

For the 2012-13 crop year started April 1, high edible oil prices and favourable weather conditions could push Australian rapeseed production above last year's record crop of over three million tonnes, Nick Goddard, executive director of the Australian Oilseeds Federation said Monday (Apr 23).

 

"Last year we had a record crop by a long shot. We're reconciling the final numbers now but [it could be] somewhere between 3-3.3 million tonnes...so it was bigger than expected," he told Dow Jones in an interview.

 

The federation's previous estimate for production last crop year ended March 31 was 2.95 million tonnes.

 

"All expectations for the new crop are that at this stage, we'll reach at least [last year's] levels and may even exceed it," he said.

 

The federation hasn't issued a production forecast for this crop year as these are early days in the annual planting period. Rapeseed is Australia's biggest oilseeds crop with output in 2012-13 likely to be valued up to AUD2 billion (US$2.05 billion). Most of this is usually exported to Europe for crushing to make bio-fuels.

 

Goddard said heavy rains and flooding earlier in the year have resulted in sufficient soil moisture in New South Wales and Victoria states. Soil conditions are a bit dry in South Australia and Western Australia, the main rapeseed producing states, but that's normal ahead of planting, with rains expected in May and June.

 

Rapeseed prices are favourable and relative to wheat, grown mostly in the same areas as canola, returns look attractive, he said. Rapeseed currently fetches AUD555 (US$569) per tonne delivered at Geelong Port, compared with about AUD520 (US$533) per tonne a month ago.

 

Such high prices mean "it will be another bumper year," ahead in terms of production, he said.

 

Commonwealth Bank of Australia said in a note Monday that the bullish influences on oilseed prices remain consistent with those observed in recent months. Disappointing harvest results in South America, with the Argentine government reducing its local production forecast again last Thursday, and strong Chinese demand for US soy, supported prices, the bank said.

 

Goddard said Europe has had a poor season for rapeseed while production in Ukraine is down. The supply shortfall in these countries is the key driver in the demand for Australian rapeseed.

 

Of an estimated production of at least three million tonnes, only about 700,00-800,000 tonnes of rapeseed will be crushed and used domestically while the rest will be mostly exported to Europe to make bio-fuels.