The Cinderella crop of Australia has been attracting more and more attention from Japan, the Prince Charming of canola customers.
Japan is looking at Australian canola as an alternative to the tight supplies available in Canada.
Australian farmers are planting a record crop of almost 1.4 million acres this year and expect to harvest about 825,000 tonnes, according to the Australian Bureau of Agricultural and Resource Economics.
Joachim Toens, senior trader at Xcan Grain Pool Ltd., expects Australia to ship as much as 350,000 tonnes to Japan this year. Japan usually imports from all sources about 1.9 million tonnes per year.
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“Japan is the number one customer for Canada so that will directly cut the Canadian exports,” Toens said.
“The Japanese, they support a second supplier for canola,” he said, explaining importers don’t want to put all their eggs in one basket.
A half a dozen years ago, Canada filled almost all Japan’s needs.
The size of the market hasn’t changed much, but Canada now regularly sells 1.6 million tonnes to the country, according to the president of the Canola Council of Canada.
“We have been our own worst enemy in the sense that we have driven the Japanese to look for alternative sources,” said Dale Adolphe.
Sometimes, Japanese customers don’t like the price of Canadian canola.
But at other times, canola supply has been held up by strikes, mud slides, avalanches and rail car shortages, in addition to planting shortfalls.
“I think Canada and Japan both recognize that Canada’s total grain handling system is being stressed and anytime anything goes wrong, then the whole system just backs up,” Adolphe said.
“It’s being stressed to a point where everything has to work perfectly for us to meet targets.”
In Australia, where the grain handling and marketing system is radically different, exporters take delivery of most of the canola they buy right after harvest.
The past president of the Canola Association of Australia said the crop has become popular there because farmers like how it breaks root disease cycles for wheat, their major summer crop.
Ian Mack, a grain buyer for a company that exports and owns a crushing plant, said farmers like the money canola earns too.
He said the canola association hopes farmers eventually consistently harvest 1-1.5 million tonnes per year.
“We do not see ourselves as pushing too far above those acreages just on constraints of acres and rotation, and on available markets,” Mack said.
Canadian exporters are mindful of Japan’s wandering eye.
But with strong demand from other importers and a blossoming domestic crushing industry, they’re not expecting an empty dance card for the crop anytime soon.
“Even in 1994, when we had record canola acres and production, it still got sold and the carryout position was anything but large or burdensome,” Adolphe said.
“I guess the problem is letting someone else in the door to supply the Japanese market or any other market, then at some stage in the future … we may not be able to get back in as easily,” he said.
