Grain Market Update - Canola (May 2024)

The following graph shows the movement in ICE November 2024 Canola Futures price expressed in A$ and the movement in MATIF November 2024 Futures price expressed in A$. Also included is the 10 year average ICE November Futures price expressed in A$ and the 10 year average domestic price at Port Kembla.

At present the ICE November Futures price is A$746/tonne equivalent and the MATIF November 2024 Futures price is $682/tonne equivalent. The rise in the international canola market has been driven largely by ongoing drought in Canada’s western prairies and Western Australia, while record flooding in parts of Brazil has impacted soybean production. China has also been importing large quantities of soybeans for pork production, which fuels the demand for all oilseeds. Conflict in the Middle East has impacted energy prices which also has a flow on effect for oilseed prices. Underpinning all this is the ongoing demand for Biofuel in western countries, namely the EU, US and Canada.

It is expected that the domestic price will follow the lead of the international markets and increase, particularly in the short term. However, with East Coast canola crops on the whole established, with a full moisture profile and winter rain forecast, the large negative basis may remain until harvest. Though the only certainty going forward is uncertainty, the high volatility of prices seen in the last few years is likely to continue.

Published 2024 domestic canola prices at Port Kembla are difficult to obtain at present and so are not shown in the graph below. However, based on Victorian port prices, it is expected to be around $700/tonne, which would result in a basis of around -$A50/tonne.

A PKE price of $700/tonne, which is in excess of a Decile 8 price, represents $662/tonne local depot with freight to port of $38/tonne. This should be above clients’ Break Even Price at average yields, particularly when factoring in high input and interest costs.