Grain Market Update - Canola (April 2020)

The following graph shows the movement in ICE November 2020 Canola Futures price expressed in A$/tonne and the domestic canola price delivered Port Kembla. Also included is the 10 year average ICE November Futures price expressed in A$ and the 10 year average domestic price at Port Kembla. 

The canola price has fluctuated considerably since the beginning of the year, with he domestic price rising substantially on the expectation of a particularly small planting in 2020. However the early Autumn Break has resulted in some of these fears being allayed, while the ICE 2020 Canola Futures price has fallen A$14/tonne equivalent since January.  

At present the ICE November Futures price is A$524/tonne equivalent and the domestic price is $624/tonne delivered port.  

The resulting basis of A$100/tonne equivalent is A$40/tonne higher than the basis at the same time last year, which was A$60/tonne.

The domestic canola price at present is a Decile 9 price, calculated on prices from 2009 to date. This compares to a Decile 7 price at the same time last year.

A PKE price of $624/tonne represents $586/tonne local depot with freight to port of $38/tonne. This should be well above the average budgeted Break Even Price for clients.

While the current prices appear attractive for forward selling, the graphs show that on average, both futures and domestic prices continue to rise until the middle of the year. Locking in the price with physical forward sales of canola has been more problematic than not in recent years, due to the lack of flexibility in unwinding contracts.