Audio Script:

Hi, I’m Tim Hayes, Grain Merchant at CHS Broadbent, to take you through what’s happened in canola markets for the month of July.

The rapidly deteriorating fate of the Canadian canola crop, has pushed global values sharply higher over the last fortnight. The trade and global consumers are slowly coming to grips with the implications of a falling production outlook for the world’s largest producer and exporter of the oilseed.

Canadian farmers may have increased the area planted to canola from 8.3 million hectares in 2020 to around 9 million hectares in 2021, but the yield projection is falling rapidly. Subsoil moisture was low from the outset across much of the Prairies after below-average rainfall over the past 12 months. The crop was sown into a good seedbed in most instances, but a dry spring and extreme temps are swiftly taking their toll on the crop.

In the latest World Agricultural Supply and Demand Estimates report, the USDA pegged Canadian canola production at 20.2 million tonnes down just 300,000t from its June estimate. That is much higher than local trade estimates, most of which are under 19MT, with some are already as low as 16MT. 

A key question for domestic canola values will revolve around the EU consumer reaction to lower Canadian production and exports, and has the wider market fully priced the current North American weather concerns.

Growing conditions in the two major producing states of Australia, Western Australia and New South Wales so far have been exceptional. These gains should make up for any losses in planted area in South Australia and Vic due to the dry start. 

The southern Vic crop is starting to experience excessive moisture conditions and we may see some loss and reduced yield through these parts due to waterlogging.

The east coast grower is also excited about the potential return on investment outcome that a high price and above-average production scenario could have. 

East coast grower new crop delivered port bids all finished the week above $800 per tonne (Filmed Friday 30th July). Grower selling has been steady, but that will undoubtedly accelerate as production certainty builds heading into the spring.

Thanks for watching, please be sure to tune in again for the next update.