Australia's top grain growing state may be on for a near-record canola crop despite the oilseed, like barley's, being downgraded in sowing plans by a stampede for wheat.
Growers in Western Australia, which typically provides roughly 40% of the national wheat harvest, have planted a record 5.4m hectares with the grain, a 10% rise year on year, Australia & New Zealand Bank said.
The increase has come largely at the expense of barley and canola, although growers, encouraged by high prices, have also brought marginal land into production, lifting overall sowings by some 300,000 hectares to 8m hectares.
Barley seedings have dropped to a five-year low of 1.1m hectares, with canola area down some 17% at 1.0m hectares.
Weak prospects
Nonetheless, this figure remains higher than historical levels and - assuming a trend yield of 1.0 tonnes per hectare, which the state fell short of last year because of drought - production should reach 1.07m tonnes, ANZ said.
The current record was set in 2008-09, at 1.18m tonnes.
A big crop of the rapeseed variant would be a welcome boost given setbacks to crops elsewhere, with a wet spring holding back output in Canada, the top canola exporter.
Canada's farm ministry overnight cut by 600,000 tonnes, to 12.7m tonnes, its estimate for domestic production.
Meanwhile, hopes for the rapeseed harvest in Germany, the European Union's biggest producer, have been dented by a dearth of rain.
Oil World, the influential oilseeds analysis group, last week cut to 4.65m tonnes its forecast for the harvest, representing a fall of more than 1m tonnes from last year's result, while German co-operatives have estimated the crop at 4.4m tonnes.
The US Department of Agriculture foresees world rapeseed production, including canola, falling behind consumption in 2011-12 for a second successive season.
Into the red
The cut by Australian growers in canola seedings this year is in part down to weather, with a dry start to autumn persuading many farmers to delay sowings.
"Farmers that chose to wait for rain before sowing would have had to wait until mid-May. At that point, it was quite late to be sowing canola, and most farmers would have opted to sow wheat," ANZ said.
However, it also reflects the higher costs, in fertilizer and pesticide terms, of growing canola, which do not look this season like being rewarded with greater profits.
Gross margins were, at about Aus$120 a tonne last season, roughly 50% higher than those for wheat. However, thanks to especially high wheat prices, those figures have now converged at about Aus$300 a tonne.
With farms in some areas of Western Australia losing Aus$500,000 each last season, because of the drought, "managing cash flows and debt levels for the 2011 cropping season has been a priority", ANZ said.
Source: Agrimoney.com