Oilseed outlook for 2002
GLOBAL consumption of oilseeds and oilseed products has grown rapidly over the past decade and world oilseed production has had to grow by over 40 per cent to meet that demand.
In the nine years to 2001-02, the main production gains have been in soybean (55 per cent), canola (45 per cent) and palm oil (156 per cent). Canol a and sunflower production peaked in 1999-2000 in response to lower prices, and has declined over the past two seasons but soybean and palm have continued to grow.
The current situationThe reduction in canol a and sunflower production over the past two years has seen a sharp reduction in stocks and a consequent price recovery. Vegetable oil stocks are expected to remain tight and prices buoyant until at least June 2002. As always, there is a range of factors, some positive, some negative, that influence prices in commodity markets. Some of the factors helping to maintain buoyant oilseed prices in 2001-02 include:
- A sharp reduction in canol a production in Canada in 200 I has reduced global stocks.
- Lower sunflower yields in Turkey, Romania and Bulgaria due to drought and in France due to late planting have reduced world supplies.
- Wet weather and flooding in Argentina at planting have reduced the size of the current sunflower crop.
- Dry weather in Malaysia in mid-200 I has stressed oil palms and is expected to reduce oil yields in the first half of 2002.
- Reduced global supplies of canola, sunflower and paim will stimulate demand for soybean and help reduce stocks in the United States.
- World consumption of oilseeds continues to grow strongly, creating opportunities for production increases to continue.
- Banning the feeding of meat and bone meal in Europe a year ago and in Japan more recently, to prevent the spread of mad cow disease, has increased imports of soybeans and soybean meal. A shift from beef to pork and chicken in Japan will also stimulate demand for soybean imports.
- The record 200 I US soybean crop of 79.6 Mt was 4.5 Mt bigger than the 2000 crop, which was also a record. The US Department of Agriculture (USDA) is predicting a fifth consecutive increase in world soybean stocks.
- Current price relationships indicate that another increase could occur in US soybean plantings in 2002.
- The USDA has projected the current South American soybean crop area to be 11 per cent bigger in Brazil and 7 per cent bigger in Argentina than last year, with the likelihood of a second onsecutive record crop in both countries. A very wet spring has provided excellent subsoil moisture and the prospect of above-average yields in both countries.
What does this mean for Australian oilseed growers in 2002?
Canola. Low world stocks and our lowdollar are likely to see canola prices remain buoyant through most of the newgrowing season.
Sunflower. With world sunflower suppliesat an e ight-year low and world vegetableoil prices expected to firm, the buoyant prices on offer at planting time are likely to be maintained.
Soybean. Low cottonprices have seen an increase in soybean plantings. Crushing -bean prices have irmed a little since the end of the US soybean harvest in November and seem likely to remain in the $380-400/t range.
Winter specialty oilseeds
Safflower. Australian production has tended to fluctuate widely from year to year, up to about 25,000-30,000 tonnes per year. About half has been grown in Victoria, a quarter in NSW and the remainder in Queensland and South Australia. The crop was very small in 200 I but is expected to climb back over the next few years as new markets are developed and improved Californian varieties are introduced.
The demand for conventionally grown oil is mainly for high linoleic oil and the organic demand is mainly for high oleic oil. There is future potential demand for both oil types into California.
Growers can expect to receive on-farm prices in the range of $280-320/t from ost market segments. The birdseed market is more volatile and may fluctuate beyond this range.
LinseedlLinola. The demand for linseed is quite small, possibly less than 10,000 t per annum. Australian Bureau of Statistics figures indicate that annual production in the late 1990s ranged between 6,000 and 10,000 tonnes. Most was grown in Victoria, followed by NSW. In the past year or two, production has fallen below domestic demand and necessitated imports from Canada.
The single biggest market is in thebakery trade, which uses about 5,000 t ofhigh-quality seed. There is a growing demand for organically grown seed. The pet food and birdseed trade uses small uantities, often taking second-grade seed. Linseed is usually contracted to local grain merchants/seed cleaners who buy for end users. Conventionally grown seed isexpected to bring on-farm prices up to $450/t in 2002. Organic linseed may be worth about $600/t.
Linola is a specialised type of linseed that has a yellow seed coat and produces oil high in linoleic acid (like sunflower oil). It differs from linseed, which has brown seed and industrial-quality oil, high in linolenic acid. Significant markets for Linola oil have not been established in Australia, so its main use is as whole seed in the bakery trade.
Elders Ltd has exclusive production and marketing rights for Linola and will be offering area-based forward contracts for about 1,500 t for the domestic market and will pay $450/t, delivered to local cleaning plant.
Further information from Mr Damien Deckert, Elders Ltd, Wagga Wagga, 02 6923 4677.