June 8, 2012

 

Australia's rapeseed planting surges higher than first predicted

 

 

The Department of Primary Industries (DPI) has upgraded its forecasts by more than 100,000 hectares as the record rapeseed planting in NSW has skyrocketed even higher than first predicted.

 

The rapeseed crop is now all but planted and estimated to be about 668,500 hectares up significantly from last season's 394,000 hectares.

 

While pulses and oilseeds have risen from 0.93 million hectares in April to 1.05 million hectares in the latest DPI grains report, winter cereals have dropped from 4.25 million hectares to 4.09 million hectares.

 

The total winter crop has contracted slightly on the April estimate of 5.18 million hectares and is now expected to be about 5.14 million hectares.

 

DPI pulses and oilseeds technical specialist Don McCaffery said much of the rapeseed crop had been struggling to germinate and was suffering from low vigour thanks to dry, freezing conditions until the widespread rain of the past two weeks intervened.

 

McCaffery said even the April prediction of a 548,000 hectares rapeseed planting would have surpassed the previous record in NSW, which was just more than 400,000 hectares.

 

"It's a significant record. It will likely put pressure on the storage and transport infrastructure," he said.

 

"There are a lot of people who know and understand the economic benefits of rapeseed in the rotation, but this year there has been a significant increase in area for some people driven by price alone."

 

McCaffery said the largest rapeseed plantings were in the west and south-west of the State. He said the rain which helped the rapeseed crop so greatly two weeks ago now needed to disappear.

 

"What we want now is sunshine. Cloudy and rainy weather is not good," he said.

 

"The soil moisture is great, but the sheer cold ... this cloud has to go away. There have been quite severe frosts and we have seen some frost damage to establishing rapeseed."

 

About 55% of the wheat crop had been sown by the third week of May. While local wheat prices rebounded during the past fortnight, Commonwealth Bank commodities analyst Luke Matthews warned the outlook was not strong.

 

"We have seen an improvement in local wheat prices in the past few weeks, largely as a result of strong gains in international markets," he said.

 

"That improvement in the local wheat price for current supplies but also for forward pricing for the 2012-13 crop has provided some very favourable pricing opportunities for Australian wheat producers in what we would describe as a rather subdued environment for grain pricing."

 

Matthews said predicted improvement in global grain inventories during the next 12 months and "significant headwinds from the global economic environment" did not bode well for later in the year.

 

"Given those headwinds, the lift in local wheat prices has certainly provided an opportunity for many growers to take some cover in what is otherwise an uncertain outlook for prices more broadly," he said.

 

"There is certainly a risk the prices in December this year will be below the values we see today."

 

Matthews said the Common-wealth Bank still expected NSW wheat production this year to be considerably above average, at 7.8 million tonnes.

 

Liverpool Plains agronomist Pete McKenzie, Agricultural Consulting and Extension Services, Quirindi, said growers in his region had scaled back wheat hectares this year, opting to instead use a rotation or fallow paddocks through to summer.

 

McKenzie said with the bulk of the sorghum harvest completed, the rain of the past fortnight would prompt some growers to double-crop country.

 

"The gross margin potential for wheat is not so good," he said.

 

"Blokes up here have copped a fair bit of stick in the past two years with wet harvests and that's put a bit of a bad taste in their mouths.

 

"What we need is a hiccup in Russia to lift the wheat price. We're hoping the price does kick a bit because they're (farmers) doing it for fun at the moment."