Grain Market Update - Canola (May 2023)

The following graph shows the movement in ICE November 2023 Canola Futures price expressed in A$ 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.

 At present the ICE November Futures price is A$760/tonne equivalent and the domestic price is $647/tonne delivered port. The resulting basis of -A$113/tonne equivalent, is similar to the basis at the same time last year, which was -A$120/tonne. However current prices are in stark contrast to those seen this time last year, which were A$1,187/tonne equivalent for ICE November 2022 Futures, while the domestic price was $1,066/tonne delivered port.

 Despite the large negative basis, which has been present for over 12 months, there is limited upside predicted in canola markets. This is due to high global canola stocks, favourable growing conditions in the EU and reductions in energy prices, which can lead to a reduction in biofuel demand. However, relatively high volatility is likely to continue.

 The domestic canola price at present is in excess of a Decile 7 price, calculated on prices from 2011 to date. This is lower than this time last year, when prices were at a decile greater than 9.

 A PKE price of $647/tonne represents $609/tonne local depot with freight to port of $38/tonne. This may be below clients’ Break Even Price at average yields, particularly when factoring in high input and interest costs.