MarketsFarm — Despite canola production in Australia being set to drop 26 per cent in 2022-23, the country’s farmers are still projected to harvest the second largest crop, according to the U.S. Department of Agriculture’s attaché in Canberra.
In the attaché’s report, released Monday, canola production for the coming crop year was projected to be 4.7 million tonnes. While that’s a significant decline from the record 6.35 million tonnes harvested in 2021-22, it’s higher than the previous record of 4.5 million tonnes.
The attaché attributed the decline in the amount of the oilseed grown to rising fertilizer costs and the tightness of its supply. The report noted that the average price for nitrogen-based fertilizer in Australia was US$235 per tonne, which skyrocketed to US$654/tonne by January of this year.
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Although Australia imports about 10 per cent of its fertilizer from China and Russia, political changes regarding those countries will be felt by Australian farmers. China has banned fertilizer exports and Australia is among those countries that imposed economic sanctions against Russia following the invasion of Ukraine.
The attaché noted the full effects of that war have yet to be accounted for in the report, particularly with the lack of sunflower oil coming out of Ukraine. With Ukraine’s ports devastated by the Russian onslaught, the country has lost its primary means of exporting its grains and oilseeds. Added to that will be severely reduced production levels of all crops in Ukraine due to the war.
The attaché projected Australian farmers to plant 2.7 million hectares in 2022-23, down 11.5 per cent from the 3.05 million the previous year, which was the third most on record. Coupled with the fertilizer issues, yields are expected to be 1.74 tonnes per hectare, for a drop of 16.3 per cent from last year.
On the plus side, after years of drought the soil moisture levels in Australia have remained good for the most part, especially in the east and south. However, the west, where almost half of the canola is grown, is somewhat drier.
With reduced production, comes reduced exports and the attaché pegged those for the coming crop year at 3.6 million tonnes. While down 25 per cent from the record 4.8 million tonnes in 2021-22, they should still mark the third largest on record. That said, Australia will remain a distant second to the world’s top canola exporter, Canada.
By far Australia’s main export customer is the European Union, which takes in about 70 per cent of the country’s overseas shipments of canola. One major reason for this, the attaché pointed out, is Australia’s canola is non-genetically modified. While that canola goes towards biofuel production in EU, the meal that’s used for feed afterward must be non-GMO.
The report noted that canola grown in western and eastern Australia is mostly exported, while that in the south is largely used for domestic consumption. It’s that region where much of Australia’s cattle, swine and poultry are located.
USDA’s next supply and demand estimates are to be published Friday.
