Grain Market Update - Canola (November 2023)

The following graph shows the movement in MATIF 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 MATIF November Futures price is A$676/tonne equivalent and the domestic price is $658/tonne delivered port. The resulting negative basis of A$18/tonne is almost the smallest basis for the calendar year. The corresponding basis for this time last year using ICE markets, was -$219/tonne. Currently the domestic market is very closely aligned to the MATIF Futures market as seen in the graph below, rather than ICE Futures market, which has traditionally provided a greater influence over Australian canola markets. This trend, however, is not surprising as the majority of canola exported from Australia is destined for European biofuel markets.

The canola harvest is well under way across the district, with yields generally similar, or slightly greater than long term average yields. A good result from a highly variable growing season.

The high prices which have been experienced in the last few seasons has influenced many growers’ price expectations. The domestic canola price at present is a Decile 7 price, calculated on prices from 2013 to date. This is only slightly lower than the same time last year when the price was a Decile 8. With the good yield predictions in Victoria and southern NSW, plus the small negative MATIF basis, limited upside of prices is expected in the short term. Growers may have to adjust their price expectation of harvest canola prices and limit warehousing significant tonnages of canola.

A PKE price of $658/tonne represents $620/tonne local depot with freight to port of $38/tonne, which should be in excess of most clients’ Break Even Price at budgeted yields.