Canadian canola could make its way into Australia

CNS Canada — A potential shortage of canola on Australia’s east coast has the oilseed industry there musing about the potential of importing Canadian canola to keep processing plants going.

A story Tuesday on the Australian website Farm Online quoted Australian Oilseeds Federation CEO Nick Goddard as explaining the potential for Canadian canola to make its way to Australia.

Australia has been dealing with an ongoing drought for years now and due to dry conditions on the east coast, coupled with frost the area received lately, Goddard expects there to be a canola shortage there this year.

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While Western Australia will probably produce more than half of the country’s canola, costs to ship it across the country to the east coast could see Australian processors looking for cheaper alternatives, including importing Canadian canola.

Whether Australia imports Canadian canola will all come down to pricing, Godard said via email. “With the domestic basis so out of kilter with global prices, anything is possible.”

Australian canola is currently priced around A$600-$630 (C$561-$589) per tonne, while the ICE Futures canola contract for November is around C$495 per tonne in Canada.

“The majority of Australian canola heads to the EU, and with their lower production this year, we can expect to see ongoing demand for Western Australia — so east coast crushers will have to offer prices above what the EU is prepared to pay for (Western Australia) canola,” Goddard said over email.

A Canadian canola trader said while he expects Australian domestic canola consumption to be below their normal production level, the shortage could affect their export amounts, which could make them want to import canola.

“It’s a pretty long haul for canola from Canada to Australia. But it’s possible that it could happen because these shortages are going to be in the eastern areas and maybe they’re finding (logistical issues),” said Ken Ball of PI Financial in Winnipeg.

“I would imagine it may be cheaper to actually ocean-freight canola from Vancouver then it would be to rail-freight it from Western Australia.”

Australia in the past has imported Canadian canola, but only in a few instances. According to data from Statistics Canada, there were 50 tonnes of Canadian canola sent to Australia in December 2017 and 57,080 tonnes exported in November 2006.

Canola was imported into Australia in 2006 due to drought. Before that, it hadn’t been exported to Australia in decades.

“Australia has imported Canadian canola in the past — so it is a possibility that it could happen again this year. I don’t have anything more concrete at this stage — other than to say it is a possibility,” Goddard said over email.

According to Ball, if we do see Canadian canola exported to Australia, it probably won’t have a huge impact on the market. The global export balance sheet would just see Western Australia step up and export more to Canadian customers such as China.

“It wouldn’t really change anything significant. It would only be significant if the crop dropped so low that they’re unable to meet domestic needs, but it doesn’t look like that’s going to be the case at all,” he said.

— Ashley Robinson writes for Commodity News Service Canada, a Glacier FarmMedia company specializing in grain and commodity market reporting. Follow her at @AshleyMR1993 on Twitter.

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Ashley Robinson writes for MarketsFarm specializing in grain and commodity market reporting.

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