Australia: rain-affected canola trickles into NSW sites

Segregations for downgraded canola have opened at selected sites in central and southern New South Wales to cater for rain-affected seed.

However, the vast majority of deliveries to date are of sound quality, and the high quality of seed coming in from the Victorian harvest and much of southern NSW is helping to counter the impact of downgrading on domestic and export markets.

Australian Oilseeds Federation executive officer Nick Goddard said some growers have been heavily impacted by canola downgrading.

However, a big New South Wales crop, and the spread on maturity times has helped to buffer the impact of rain so far.

“At this stage, the actual incidence (of downgrading) is relatively low… but for impacted growers, it’s significant.”

Grain Focus principal Michael Jones said the incidence of sprouted canola appears to be very low on the south-west slopes of NSW, where a large number of crops are yet to be harvested.

“So far, we’ve seen hardly any,” Mr Jones said.

“Test weight seems to be holding up, and oil is really good at 44-48 per cent.”

However, some districts and farms have suffered rain-related downgrading, with windrows that got drenched seemingly harder hit than direct-headed crops.

Last week, CAN2 and CNTW segregations opened at selected sites to take in canola with a test weight as low as 58 kilograms per hectolitre, 4kg below the cut-off for top-grade CAN1.

In response to grower demand, GrainCorp is taking in CNTW at the Parkes sub-terminal in central NSW, and at Ardlethan, Bribbaree, Coolamon, Cunningar, Henty West and Milbrulong.

It is being bid at a discount of around $60 per tonne to the standard CAN grade, which also pays bonification for oil content above 42pc.

GrainCorp is Australia’s biggest oilseed crusher, and the only bidder on CNTW at its sites, which indicates the off-spec seed could well make its way into the company’s major plant located at Numurkah in central Victoria.

Cargill’s GrainFlow is also taking in off-spec canola at its Narromine, Oaklands and West Wyalong sites in a split CAN2 segregation.

It has a tolerance for up to 5pc sprouting, and with a test weight of 61-61.9kg/hectolitre at $25/t discount to CAN, and test weight 58-60.9kg at a $50/t discount to CAN.

In a statement, Cargill said it had opened for CAN2 deliveries at the three sites because many NSW growers were facing “enormous challenges” in storing rain-affected canola.

CAN2 is not an AOF or Grain Trade Australia-recognised segregation, and its specifications may therefore be subject to change.

“Cargill will work with its global network to find possible markets for the affected product.”

Cargill is also an oilseed crusher, and its site at Newcastle may use some CAN2.

Industry sources have said the domestic feed market could take up to 100,000t of off-spec canola in NSW, and domestic crushers will take a little to blend with high-quality seed which is in ample supply.

Murrumbidgee Grain Services (MGS) at Wagga Wagga on December 4 opened for CNTW, and director John Carroll said the majority of canola coming in has made CAN specs.

Late last week, Mr Carroll said growers were looking at a $40/t discount for low test weight canola.

“That’s closed up a bit now, but there’s no oil bonus.”

This alone can cost growers up to $70/t.

Mr Carroll said around 80-100 millimetres of rain fell late last month on canola crops just prior to harvest, and this prompted MGS to open for CNTW deliveries.

He said the stack average for CNTW held by MGS as of Thursday last week was around 60-61kg, and it was possible containerised markets for it would develop.

“Oil levels are still okay.”

NSW has not seen a significant volume of rain-affected canola since 2010-11, when a CAN3 segregation was opened by some bulk handlers to accommodate low test weight and sprouting of up to 10pc.

This higher level of sprouting is yet to appear at sample stands.

Mr Goddard said domestic and selected offshore crushers should be able to accommodate some off-spec seed, which brings a slightly reduced efficiency with the discount price.

Diluting the impact of downgraded seed from NSW is the huge WA crop, which is forecast by ABARES at 2.75 million tonnes (Mt), more than double the 1.33Mt forecast for NSW out of the a national crop seen at a record 5.73Mt.

WA domestic requirements are minimal, and it has already started shipping new-crop canola.

“The Europeans are taking a huge amount of canola from WA,” Mr Goddard said.

“The amount of NSW crop that might end up in Europe is relatively small.”

In its case study released via Lachstock on December 8, Bayer as a major supply of canola seed in Australia said upgrades in yield and downgrades in quality had been seen in the Australian harvest to date.

“It’s still a fraction too early to state with confidence that the quality of the canola crop is known and now it’s time for the market to get on with dealing with what we have.”

Bayer said the volume of the WA crop is huge and yields across NSW and Victoria have largely met or exceeded expectations, despite variable quality in NSW, while the South Australian crop has had variable conditions.

“The swings on what quality discounts we will see for low test-weight canola in NSW will not only be determined by the profile in NSW but also what happens as harvest moves south in Vic.

“NSW on its own has seen around 20pc of the crop harvested with some degree of quality misfortune.

“Benefits will come if the Victorian crop can be harvested with a higher degree of quality.

Bayer said upgrades in Victoria will also be upgrades for NSW.

“With a record crop in Vic potentially on the cards, the ability to blend the downgrades from NSW in crush plants in Victoria or prior to exporting out of Victoria bodes really well for both parties.

It would also see the spreads of lower-grade seed narrow up as confidence grows that there is enough above-spec product to dilute the downgrades.

GRAIN Central

Tags: downgrade, domestic, rain-affected, canola, New South Wales, crushers