'Best start in a generation' for Australian canola

Oilseeds experts raised the bar on Australia's canola crop, despite warning that the best start for crops "in a generation" could give way to less benign conditions as El Nino kicks in.

The Australian Oilseeds Federation pegged the country's production of the rapeseed variant this year at 3.86m tonnes, well above forecasts from commentators.

On Wednesday, Abares, Australia's official commodities bureau, pegged the crop at 3.47m tonnes while the US Department of Agriculture put it at 3.10m tonnes.

The federation said that "the start to the 2014 canola season has been described as the best in a generation, with a full moisture profile available at planting time in many regions, and good follow- up rain and warmer-than-average temperatures in the weeks after seeding".

'Area is strong'

The AOF hopes for Australia's crop, an important source of world export supplies, reflected in part an estimate of strong plantings, at 2.52m hectares the second highest ever.

"Despite cereal price relativity to canola favouring cereals more this year than in the past few years, canola area is still strong," it said, in a forecast which included an allowance for dry weather in parts of New South Wales, the second-largest growing state.

"There is little canola sown in the north of the state due to the very dry autumn, and very modest moisture reserves," the federation said, while adding that conditions elsewhere in New South Wales had been termed "excellent" and "ideal."

Indeed, these parts of the state may have received too much of a good thing, with warm temperatures and adequate moisture leaving crops "in a more mature state than usual going into winter, with reports of plants in some areas approaching budding stage.

"The impact of premature maturing on final yield is yet to be determined."

El Niño threat

Whatever, the AOF said it was assuming below-average yields for New South Wales, Victoria and South Australia to reflect the "growing likelihood of an El Niño event becoming established by spring".

Official Australian meteorologists rate at 70% the chance of an El Niño, a weather pattern linked to warm Pacific water temperatures which typically causes dryness in eastern Australia, and in much of South East Asia too.

Besides the direct impact of a lack of moisture, the prospect of an El Nino "could lead growers to underinvest in their crops through the season, eg through less application of nitrogen, which could further impact yield", the federation said.

Still, in Western Australia, the top canola-growing state, where El Nino is seen as having less effect on the weather, "grower confidence in canola goes from strength to strength, on the back of record volumes last year, and very strong prices.

"Unlike in the eastern states, grower sentiment is not tempered with the threat of El Niño, so ongoing investment in the crop during the season is expected."

'Crop conditions are good'

The comments are the latest in a series of broadly upbeat comments on world canola-rapeseed crops, with the USDA on Wednesday upgrading its estimate for the European Union crop, the world's biggest, by 500,000 tonnes to a record 22.0m tonnes.

"Favourable weather during May has increased expectations of a bumper harvest for both wheat and rapeseed," the USDA said.

In Canada, the top exporter, concerns over planting delays have eased somewhat over sowing delays.

"Crop conditions are good for canola," Citigroup's Sterling Smith said.

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