Grain Market Update - Canola (September 2022)

The following graph shows the movement in ICE November 2022 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 basis for the domestic price at Port Kembla, plus the corresponding basis for the current year. 

The price for canola has been very volatile all year, with large daily price swings let alone from week to week. Currently the domestic price is sitting at A$733/tonne, while The ICE November Futures price is A$901/tonne equivalent at present. The resulting negative basis of A$168/tonne equivalent is A$118/tonne lower than the basis at the same time last year. 

Since the middle of June, the domestic canola price has fallen approximately $250/tonne, due to harvest pressure from the northern hemisphere reducing the futures price, in conjunction with a weakening basis.  

On a positive note, the domestic price in the last few years has not been greatly influenced by domestic supply. Therefore, as Australian production is forecast to be above average, the price should be relatively stable from price decreases due to higher supply. 

The domestic canola price at present is a Decile 8 price, calculated on prices from 2011 to date.  

A PKE price of $733/tonne represents $693/tonne local depot with freight to port of $40/tonne. This should be significantly above the Break Even Price for clients at budgeted yields.