Australia canola crop could be huge

Canadian canola growers will likely be facing stiff competition from their Australian counterparts this year.

Rabobank is forecasting a 21 percent increase in Australian canola planting to a record 8.97 million acres of the oilseed, according to the bank’s 2022-23 winter crop outlook.

That is due to the confluence of great prices and seeding conditions at the time of planting, according to report author and Rabobank agriculture analyst Dennis Voznesenski.

The country’s winter crops are seeded now and harvested in November and December.

Canola uses a lot of fertilizer, pesticides and herbicides, but the high prices will more than compensate for the rising input costs, he said.

The increase in canola plantings is coming at the cost of barley, pulse and oat acres, which are three other crops where Canadian and Australian farmers go head-to-head in international markets.

Barley planting is forecast to fall 6.7 percent to 10.1 million acres.

“Farmers are pretty uncertain about what the future looks like for barley just because we don’t have China,” said Voznesenski.

China imposed an 80.5 percent anti-dumping and countervailing duty on Australian barley in May 2020.

The country had been Australia’s top barley customer, accounting for about 70 percent of total exports of the commodity.

Pulse planting is forecast to plummet 13.6 percent to 4.12 million acres, with the biggest drop being chickpeas.

Voznesenski said farmers have plenty of leftover chickpeas from last year’s massive crop, which has weighed down prices.

Australia is having problems moving all of last year’s crops because the exportable surplus was larger than the country’s port capacity.

Chickpea movement has been particularly disappointing because of the ongoing global container crisis.

“Farmers don’t know what to do with the chickpeas they already have and hence they’re planting other crops,” he said.

Canada’s yellow peas sometimes compete with Australian chickpeas in the Indian subcontinent.

Oat acres are forecast to drop 5.2 percent to 2.07 million acres. Voznesenski said there is no particular reason for the decline other than the better anticipated returns for growing canola.

Wheat acres will be up 1.4 percent to 33.6 million acres, according to Rabobank.

The world needs a big Australian wheat crop. The U.S. Department of Agriculture is forecasting the smallest ending stocks in the eight major exporting nations since 2007-08.

Rabobank expects global wheat prices to remain near current levels through the first quarter of 2023. It anticipates continued extreme volatility as markets react strongly to news about exports out of Ukraine, Russia and India.

The bank anticipates strong feed barley demand with Chicago corn forecast to trade in the US$7.25 to $7.60 per bushel range.

“Inflationary pressure on disposable incomes could stifle demand growth for malting barley this year,” the bank stated in its outlook.

There will be increased canola production in the European Union and Canada, but Australia’s production is likely to drop about 10 percent from last year’s record despite the big increase in planted acres. Yields should be good, but not as phenomenal as last year.

Rabobank is forecasting only a modest downward correction in canola prices because the broader edible oil complex remains tight, fuel prices are expected to stay elevated and crush margins are good.

The bank believes lentil prices could see some softening in the second half of 2022 because of increased Canadian production and favourable pulse stocks in India.

“If the Indian government does not extend its temporary removal of its lentil import tariff, we will almost certainly see downside in coming months,” said the bank.

It also sees no upside in lacklustre chickpea prices because of good pulse availability in India, inflationary pressures in the Indian sub-continent and no improvement in ocean freight logistics on the horizon.

A poor Indian monsoon or stronger-than-expected demand out of Pakistan could create some opportunities for chickpeas.

Tags: Canada, wheat, oat, Australia, markets, China, Rabobank, winter crops, forecasting, barley, winter crop outlook, planting, pulse, canola, prices, Oilseed