Grain Market Update - Canola (November 2021)

The following graph shows the movement in ICE November 2021 Canola Futures price expressed in A$ and the domestic canola price delivered Port Kembla. Also included is the 10 year average ICE November Futures basis for the domestic price at Port Kembla, plus the corresponding basis for the current year.

At present the ICE November Futures price is A$1,058/tonne equivalent and the domestic price is $870/tonne delivered port. The resulting negative basis of A$188/tonne equivalent is the lowest basis for the calendar year. The corresponding basis for this time last year was positive $16/tonne.

The fall in the domestic price since October is due to better than expected harvest expectations arising from the cool, moist finish to the season. Areas in the north of the state have been recording yields approximately 2.5 times their long-term average, with good oil levels. Growers in the central and southern half of the state have yet to harvest any significant quantities, but yields are also expected to be high.

Recent wet weather has not been helpful, with many paddocks being too wet to windrow or harvest for the foreseeable future. Anecdotally, reports have emerged of grain sprouting in windrows. With the stormy conditions those crops which have been left to direct head will be vulnerable to wind and hail damage. These factors may well cause the price to rise in the short term.

The domestic canola price at present is a Decile 9.8 price, calculated on prices from 2009 to date. This is significantly higher than the same time last year when the price was a Decile 7.8 price.

A PKE price of $870/tonne represents $832/tonne local depot with freight to port of $38/tonne. This is well above clients’ Break Even Prices.