ABARES says Australian canola production could plunge 41% y-o-y due to dry conditions.
Australia's upcoming 2023-2024 winter crop season is off to a concerning start, with dry conditions across key farming regions forcing many growers to reduce plantings, according to a new report from the country's Department of Agriculture (ABARES).
While some areas benefited from autumn rains, replenishing soil moisture, other major crop zones remained unusually parched. With below-average soil moisture discouraging planting in certain regions, Australia's total winter crop area is forecast to fall compared to earlier forecasts to 23.3 million hectares despite being still above the 10-year average. Wheat and canola plantings are expected to be down 2% and 11%, respectively, according to ABARES.
It is the canola crop that could see the starkest impact. Following three consecutive years of record harvests, with the prior season producing 8.6 million metric tonnes, according to the USDA, Australia’s canola production is predicted to plunge a staggering 41% in 2023-2024 to just 4.9 million metric tonnes. The onset of El Niño conditions expected later in the year will likely hamper yields significantly.
Though Australia’s overall winter crop production is forecast to sink 34% from last season’s bumper harvest, it’s the canola decline that could reverberate through global vegetable oil supplies. Australia’s canola exports are estimated at 4-4.7 million metric tonnes, down sharply from 6.7 million metric tonnes last season according to the USDA.
With the EU heavily reliant on Australian and Ukrainian canola imports, reduced Australian shipments could mean increased price pressure on rapeseed markets to attract necessary supplies. However, Ukraine’s canola production is forecast to be up 500,000 metric tonnes this season, with total production estimated by market players at 3.8 to 4 million metric tonnes, which could help offset some of the Australian shortfalls.
In summary, Australia's looming canola crop problems could have serious flow-on effects on global edible oil markets already facing tight stockpiles. The 41% drop in production underscores the precarious start to the winter crop season down under.
