Aussie growers give up parched canola for grazing

The dearth of rain in eastern Australia, which is already trimming wheat hopes, has begun to dry up expectations of a record canola harvest too, with some crops so poor farmers are giving them up for grazing.

The Australian Oilseeds Federation followed up a series of upgrades to its estimate for the 2011-12 Australia harvest of the rapeseed variant with a downgrade of 100,000 tonnes, to 2.49m tonnes.

The figure would still be the highest on record for Australia’s canola production, according to US Department of Agriculture data, although now with a margin of only 30,000 tonnes above the 1999-2000 high.

However, it highlights the continuing concerns over dryness notably in part of New South Wales and Victoria which have already prompted Commonwealth Bank of Australia to cut hopes for the country’s wheat.

‘Open to grazing’

"Much of New South Wales has experienced four consecutive months of below-average rainfall, which has served to impact crops grown in the western margins of the cropping zone," the federation said.

"Some growers are reported to be about to open their crops to grazing due to their expected poor prospects."

Farmers also face a "significant" risk of mice infestations, with the threat of weeds boosted by conditions "which have not been conducive to spraying".

Australia’s canola prospects are being viewed with keen interest even in the European Union, where a disappointing harvest of rapeseed in top producer Germany, and in Ukraine, a leading exporter to the region, has left buyers prepared to look further afield for supplies.

The UK grain arm of a leading European commodities house said on Friday that "with good prospects also for Canada, and later in the season, Australia, the overall supply no longer looks so tight".

‘Deterioration in seasonal conditions’

The downgrade comes two weeks after Commonwealth of Australia cut its forecast for Australia’s wheat crop, also citing east-coast dryness, which the group said had left crops looking backward and "thin".

Indeed, CBA analyst Luke Mathews said last week that a USDA estimate of 25.0m tonnes for the Australian wheat crop was "high because of the recent deterioration in east coast seasonal conditions".

And, while some rain is forecast for eastern areas, this may not provide the relief hoped for by investors who gave Australian wheat a soft start to the week, even when futures in the grain rose on foreign exchanges.

"Most weather models suggest much of the New South Wales and Victoria will receive between 10-30mm [of rain] over the coming few days," Mr Mathews said on Tuesday.

"But forecast totals taper off to about 5-10mm in the north west of the state, the region that needs it most."

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