Increased supply leads to weaker prices

By Alana Christensen on April 04, 2017
  • Increased supply leads to weaker prices

    Canola prices are predicted to continue to fall as a result of oversupply.

Canola prices are expected to fall over the coming weeks, as increased supply leads to weaker market prices.

The prediction comes on the back of data published by the Federal Agriculture and Water Resources Department in February that predicted canola production for 2016-17 had more than doubled.

With lower prices for wheat and barley, Landmark Elmore agronomist Chris Dunn said more farmers had been moving into canola, leading to greater supply.

‘‘There’s been a lot of canola for the past couple of years,’’ Mr Dunn said.

‘‘Canola was being bought for about $500 a tonne in January, I thought that was pretty good value.

‘‘The writing was on the wall in terms of how much canola is out there.’’

Yet Mr Dunn said the situation was difficult to predict.

‘‘How far it’s going to fall, we don’t know,’’ he said.

For Peter Tuohey, who grows canola on his farm 35km west of Echuca, the news doesn’t come as a huge surprise.

‘‘When you’ve got a lot of something we know what happens,’’ he said.

‘‘We’ve well and truly oversupplied the domestic market over the past 12 months ... We’ll see what happens.’’

Mr Tuohey said he was aware of some growers that had entered into contracts to take advantage of the current prices before they fall, but said it’s not an option for many people given the uncertainty of weather and production levels.

‘‘I think many of us have been burned in the past.’’

It’s expected the price trend could continue through to the next harvest, yet canola farmer Hamish Sinclair from Devenish said canola had been continuing to do well while other crops had experienced falling prices.

‘‘The bright light on the horizon is canola at this stage,’’ Mr Sinclair said.

‘‘But I expect those prices will come under pressure from supply ... we’ll see what happens by the time we crop.’’

However, he said trying to predict future prices was tough.

‘‘It’s tough trying to predict the weather in autumn and I think trying to predict the prices in autumn is much the same. It’s a tricky time this time of year.’’

By Alana Christensen on April 04, 2017
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