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Australia poised for strong 2021 canola crop - as other producers falter

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Australia looks poised for another strong canola harvest in 2021, US officials said, even as concerns grow over prospects for output in top importer the European Union, with initial worries over Canada too.

 

Australia’s production of the rapeseed variant will ease “only slightly”, by 100,000 tonnes, year on year to 3.90m tonnes, the US Department of Agriculture’s Canberra bureau said in its first forecasts for 2021-22.

 

While the average yield is expected to ease back to 1.44 tonnes per hectare - from the record 1.70 tonnes per hectare achieved last season, boosted by ample rains – sowings will expand by 350,000 hectares to a four-year high of 2.70m hectares.

 

‘Take greater risk’

“Growers are expected to favour an increase in canola as a result of the continued high prices as well as favourable soil moisture conditions in the lead up to planting in the eastern states,” the bureau said, reporting values at a “strong” Aus$575 ($441) per tonne.

 

Values of non-GM canola - which gains a premium in the key EU import market, which has tight curbs on use of genetically modified ags – approached Aus$700 per tonne at one point last month, according to Rabobank.

 

Improved soil moisture levels “will give farmers confidence to shift area from winter grains to higher-risk canola,” the USDA bureau said.

 

“Many of these farmers were hesitant last year to plant canola after getting almost no returns from failed crops during the drought, and therefore they placed greater emphasis on the lower risk and lower input cost winter crops of wheat and barley.

 

“But after a very positive season and rebuilt confidence, growers, particularly in the eastern states, are likely to take greater risk to optimise their returns by increasing the canola planting area.”

 

Export outlook

The prospects of a strong harvest will allow Australia to achieve canola exports in 2021-22, starting in December, at 2.90m tonnes – in line with those expected for this year, and up from 1.66m tonnes in the drought-marred season of 2019-20, the bureau said.

 

The forecast comes amid concerns that the European Union - the top rapeseed importer, and for many years the biggest producer too before being overtaken by Canada – will again suffer a disappointing harvest in 2021.

 

EU (excluding the UK) output, on European Commission data, fell from 19.9m tonnes in 2017 to 15.4m tonnes to 2019, undermined by weather setbacks as well as a ban on neonicotinoid insecticides which allowed the spread of cabbage stem flea beetle, and showed only a partial recovery last year, to 16.1m tonnes.

 

‘Return of negative temperatures’

Weather is too eroding hopes over the prospect for recovery this year.

 

Strategie Grains, the analysis group which is like Agrimoney owned by AgriBriefing, on Tuesday cut by 250,000 tonnes, to 16.8m tonnes, its forecast for EU production this year, reflecting a cut to expectations for German output, thanks to a downgraded area figure.

 

Meanwhile, cold weather expected for Europe are provoking further concerns, coming just as the crop is flowering, and requiring insect pollinators.

 

“The main concern in Europe is the return of negative temperatures [Celsius] in some regions,” said Agritel, noting that this “could provoke frost damage especially on rapeseed.

 

“On this product, the supply outlook remains stretched due to poor crop conditions and reduced acreage with the two main producers - France and Germany.”

 

‘Dryness to continue’

Meanwhile, in Canada, where farmers are preparing for canola sowings, production expectations are being curtailed by dryness in southern parts of the key Prairies growing region.

 

“Limited showers this week will allow dryness to continue in southern Alberta, Saskatchewan, and southern Manitoba,” said Maxar.

 

New-crop Winnipeg November canola futures have since March 24 cut their discount to their old-crop May peers by more than 20%, to Can$142.50 a tonne.

 

And in Ukraine, a key origin for EU imports, output is expected by many commentators to decline this year, leading to a drop in 2021-22 exports of 200,000 tonnes to 2.19m tonnes according to Strategie Grains.

 

The dynamics are provoking some expectation that the EU will remain a large importer of Australian rapeseed in 2021-22, with the USDA bureau noting that “over the last five years, on average about 80% of Australia’s exports go to the European Union (EU), primarily for the biodiesel market”.

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