Hangover from rail woes dents Canada canola hopes

The hangover from transport setbacks is still being felt among rapeseed growers in Canada, but prospects in Australia have improved thanks to decent weather in most areas of the country.

The International Grains Council slashed by 700,000 tonnes to 14.8m tonnes its forecast for production of canola, the rapeseed variant, in Canada, citing agronomic reasons, with the need to rotate crops, and a dent to farmers' cashflows from the winter snarl-ups in the country's rail system.

In slowing exports, and leaving unexpectedly large inventories of crops still on farm, the hiccups had squeezed growers' cash flows.

"With many old-crop supplies still undelivered, some farmers lack the funds to purchase the inputs needed for canola," even though the oilseed offers "good returns compared to other field crops, including wheat," the IGC said.

"Consequently, more interest is being shown in crops with lower production costs, such as flaxseed and peas."

Canada's AAFC bureau forecast domestic sowings of dry peas at 1.61m hectares this year, a 21% jump year on year, with sowings of the likes of beans, lentils and mustard seed also showing strong growth.

Australian prospects

The IGC's revised forecast for Canada's canola crop represents an 18% fall in production year on year, and is below the 15.4m tonnes expected by the US Department of Agriculture, although in line with the AAFC estimate.

IGC canola/rapeseed production forecasts and (year on year change)

European Union: 21.5m tonnes, (+3%)

Canada: 14.8m tonnes, (-18%)

China: 14.4m tonnes, (unchanged)

Australia: 3.m tonnes, (-11%)

Ukraine: 2.1m tonnes, (-12%)

However, the IGC was more upbeat than other commentators on the Australian canola crop, which it upgraded by 200,000 tonnes to 3.2m tonnes.

The USDA pegs the crop at 3.1m tonnes and Australia's Abares bureau puts it at 2.95m tonnes.

"Rains boosted soil moisture reserves across large parts of the winter cropping zone ahead of planting, improving the outlook for both area and yields," the council said, if acknowledging the appeal to Australian growers of "relatively more attractive wheat prices".

 'Pretty good shape'

In fact, most of Australia is seen as viewed as enjoying favourable soil moisture levels for newly-sown crops bar some parts of New South Wales and Queensland on the east coast.

"Despite the problems in our particular patch of southern Queensland, Australia as a whole is in pretty good shape," grain trader Pentag Nidera said.

"It's been hosing down in the West Australian wheat belt, with Narrogin, for example, picking up almost 100mm for the month to date.

"South Australian grain growers are also off to a great start, with good rains reported early this week extending through to Victoria and southern New South Wales," with more rainfall due in the state over the weekend.

'More like summer'

The exception was in northern New South Wales and southern Queensland, where "temperatures more like early summer than late autumn right now", and a dearth of rainfall prompting farmers to halt sowings with only some 50-60% of winter crops in the ground, the broker said.

"The reality is, that if these areas don't get 25-50mm by the end of June, a bet which would still be drawing short odds, that [unplanted] portion of the intended crop might not go in at all."

The IGC trimmed by 200,000 tonnes to 67.9m tonnes its forecast for world rapeseed production in 2014-15, with the European Union harvest also upgrade, by 400,000 tonnes to 21.5m tonnes, thanks to "beneficial weather conditions".

Strategie Grains estimates the EU crop at 21.6m tonnes, with the USDA pegging it at 21.5m tonnes.

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