Australian canola surprises

Canola values remain well supported by the need to ration tight domestic stocks.

Oilseeds futures are generally off the 2013 highs set in early February because of the expectation of record soybean crops in South America.

Soybeans dominate the big picture for oilseeds, but there are also developments in canola that have a minor impact on prices and trade.

The Australian Bureau of Agriculture and Resource Economics and Sciences last week increased its forecast of the 2012-13 canola crop by 17 percent on better-than-expected yields and a larger planted area.

It pegged production at 3.089 million tonnes, up from a December estimate of 2.636 million.

“We always know canola acreage was very strong, and we had been hearing anecdotal reports of better-than-expected yields,” said Luke Mathews, commodities strategist at the Commonwealth Bank of Australia.

More canola was planted in New South Wales and Western Australia than was expected, while favour-able weather across Australia’s west coast boosted yields, ABARES said.

In Western Europe, heavy rain and saturated soil are threatening to reduce wheat and rapeseed production, with the most serious problems in Britain, crop analysts said.

The outlook in top producer France is also deteriorating.

“There are an awful lot of crops out there that are still under water, lots of patches of waterlogging and lots of very slow growing crops,” analyst Susan Twining of crop consultants ADAS said, referring to conditions in Britain.

Canola is seen as most at risk of losses after crops endured both dry seeding conditions in late summer and damp growing weather in autumn and winter.

“At the moment, the main cause of concern is rapeseed plants that are in waterlogged fields and which are suffering from root asphyxiation,” French oilseed institute Cetiom said in a note for clients.

In Germany the outlook is more promising. Farmers increased the winter rapeseed sown area by 10 percent on the year to 3.5 million acres.

In Ukraine, which is the third largest exporter after Canada and Australia, the crop should rebound from last year’s five-year low.

Analyst Oil World said 94 percent of the crop was in good or satisfactory condition at the end of January, up from 66 percent last year.

The snow has mostly melted in Ukraine, and there is the potential for damage if cold weather returns.

Ukraine produced 1.2 million tonnes last year, down from 1.44 million in the previous year, according to the USDA.

Oil World thinks the crop was larger, at 1.3 million tonnes.