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International canola prices surge as farmers around the world reduce plantings

Clint Jasper, Wednesday June 3, 2015 - 12:57 EST
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Farmers across south-eastern Australia are have planted fewer paddocks to canola this season. - ABC

Canola futures are sitting at two-year highs following market reactions to bad frosts in Canada.

The frosts are the latest contributor to a global downturn in canola production, a key ingredient in the production of edible oils.

After producing a record global crop of 71.6 mmt last year, farmers in the world's largest production regions, Canada and the European Union, looked to other crops as prices came down and soils needed new rotations, according to Mecardo analyst Angus Brown.

"Canadian farmers have been going flat out on canola for the last couple of years, and from what we read it seems to be a case of having to rotate some different crops through," he said.

"In the EU, prices have been at their weakest for the last three or four years and that's seen farmers plant less canola and more of other things."

Australian crops were hit by a range of pests, diseases and poor weather last season and farmers in south-eastern Australia have turned away from the crop this year.

Agronomist and Farm 360 consultant Simon Craig said that, across the Victorian Mallee, the few farmers who had planted canola had not gone to great expense to do so.

"They have really cut their seed costs back there and probably cut back on fertiliser costs as well, and targeted those weedier paddocks," he said.

Mark Kentish's canola crops were hit with Beet Western Yellows Virus, diamondback moths and a lack of rain last season.

But this season he is planting even more canola on his property at Piangil in Victoria, 400 kilometres north-west of Melbourne.

While he was confident prices will remain strong for the rest of the season, he was worried about the weather.

Local canola futures recently went above $500 a tonne, a two-year high.


- ABC

© ABC 2015

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