Some people in the grains industry predict the expected poor canola harvest will drive international prices up, leading to improved returns for Australian growers.
The Rural Bank is forecasting canola production is expected to be near record levels with increased planting due to high prices during the past six months.
Prices are forecast to ease five to ten per cent but remain above average as low supply will support global demand and prices.
AWB territory manager Matt Wallis has noted the extreme heat across the Canadian prairies decimating crops, in particular canola and wheat.
“On the other end of the spectrum we have seen heavy rains throughout western Europe with catastrophic flooding through parts of Germany since receiving around six inches of rainfall in a 48-hour period.”
Mr Wallis said the Canadian canola crop had been impacted severely, with the market shaving 15 to 20 per cent off the top end of production forecasts.
“Temperatures have consistently hit north of 45ºC and four to five degrees above the long-term average which is extremely uncommon, while in crop rainfall is approximately only 40 per cent of the long-term average.
“In what is usually a stable producing region this has most certainly caught growers off guard who traditionally are heavy forward sellers.
“Given the crop is now in the critical stage of flowering, if this trend continues it would be fair to comment further production revisions lower are likely.
“These adverse climatic conditions are also having a significant impact on the protein wheat grown through the Canadian prairies and North America.”
Rabobank's grains and oilseed analyst Dennis Voznesvenski suggested watching developments overseas as prices in the coming months would be influenced by dry conditions in Canada.