The Canola crop
A SMALL recovery in the prospects of the US summer crop, including soybeans and corn, is keeping a lid on pricing ahead of a US Department of Agriculture (USDA) World Agricultural Supply and Demand Estimates (WASDE) report due out this week.
Many analysts are predicting the USDA will slightly revise up both yield and acreage for 2012 corn and soybean crops, which will limit the upside in the market.
The focus on the US soybean crop means canola will be the crop in the spotlight in Australia.
Values have been sliding on Australian canola markets in the past week, with the forecast increase to the US soybean crop outweighing further cuts to the Canadian crop by the Canadian official crop forecaster StatsCan.
On the wheat front, Australia is expected to be one of the major stories of the USDA report, with an expected slashing of the USDA Australian crop forecast, which currently sits at up to 26pc higher than other estimates at 26 million tonnes. Most trade estimates are for a crop of between 20 and 22mt, with some as low as 19mt.
MarketCheck economist Steve Powell said late season rain in the US was likely to see the USDA boost soybean yields.
“It came a little late for the majority of the corn crop, but we are hearing it has boosted the soybean crop quite a bit.”
There have been reports of wind damage to canola crops due to be harvested in Canada which will limit potential price falls.
Canadian and European canola prices remain in a tight range against each other, in spite of the fact Europe is likely to be a net importer of oilseeds again, a fact Mr Powell attributed to Canada’s close export ties with China now.
In terms of basis in the local wheat crop, Mr Powell said uncertainty about crop production here meant basis levels remained tight leading into harvest.
“It’s come back quite a bit from earlier in the year when we were $20-30/t below US futures values, now its just a little bit below.
“The normal pattern is for the basis to get worse as our harvest begins, putting pressure on local prices.
“This could be the case again this year, with many growers likely to find the prices straight off the header attractive enough, but the trade is a little worried about attracting sufficient supplies, so it is not necessarily the case.”
Mr Powell, in the middle of a seminar tour across key areas of the NSW cropping belt, said one of the major impressions he had of this year’s crop was how patchy it all was.
“It’s very much a case of paddock to paddock, some look good, and some don’t, its not just across broader districts, but crop conditions can vary from one to the next according to germination, sowing date and thundery rain activity, so its very difficult to get a true read on it all.
“There’s certainly patches that aren’t very good, but its definitely not an out and out drought year across large areas like in the recent poor years.”