Welcome to The Weekly Harvest, where we recap this week’s hot topics in the crop market. Here is the recap for this week:
1. Canola Update
Last year’s 2020/21 canola crop stocks are tight moving into the 2021/22 marketing year, and new crop production outlooks seem shaky so far. This week, the French Farm Ministry reduced rapeseed production to 2.96 MMT – a 20-year low – amid a smaller seeded area and adverse crop conditions. Winter rapeseed seeded area fell to 984,000 hectares from 1.11 million hectares last year. Rapeseed production is expected to be 2.95 MMT, a 9% decrease from last season and 32% below the 5-year average. If realized, this would be the only crop to come in under 3 MMT in the last 20 years.
Western Canadian crop conditions are also variable. Southern Manitoba and large parts of Saskatchewan have seen sub-optimal conditions due to drought stress, frost events, heatwaves and pest damage. Much of the prairies requires timely rainfall through the growing season to ensure an average yield outcome, since subsoil moisture has been heavily depleted. FarmLink recently cut its Canadian yield expectation, resulting in 2021 production just under 20 MMT.
Demand has been robust despite the high price environment. All signs point to higher year-on-year biofuel demand and strong seed and oil exports to China and other key importers. The 2021/22 marketing year could be the second in a row where consumption outpaces production.
2. June Australian Crop Condition Outlook
Australian winter crop planting is wrapping up, and the crop is off to a decent start. The Australian Bureau of Agriculture and Resources’ (ABARES) June report highlighted good conditions.
• The agency increased its 2021/22 wheat production estimate by 2.8 MMT to 27.8 MMT, which is still below last season’s exceptional 33.5 MMT.
• Barley production was estimated to fall by 21% to 10.4 MMT, the result of smaller acres amid its trade dispute with China.
• The canola seeded area jumped by 25% to 3 million hectares (third largest ever), with production expected to rise by 4% year-on-year to 4.2 MMT.
• Chickpea seeded area is forecast to increase by 20% to 607,000 hectares in response to high prices and favourable planting conditions in Queensland and New South Wales – however, no production estimations were released.
• There were no updates to lentil seeded area or production outlooks.
Australia has had relatively good moisture and has some time before harvest (October through November), meaning conditions have time to improve.
Australia is a key Canadian competitor on wheat, canola, barley and pulses.
3. China Issues New Import Regulations
The General Administration of Customs China (GACC) recently released changes to import regulations expected to come into effect on January 1, 2022. Many believe the regulations will apply to exporters of commodities intended for human consumption in China. The Government of Canada is reviewing these regulations to fully assess exporter requirements and requesting China delay implementing these measures by 18 months to avoid unnecessary disruptions to trade flows.
The changes include:
• Evaluation/review of foreign food safety management systems
• Overseas facilities registration
• Quarantine and inspection
• Product labelling
• Food safety risk alerts
The new regulations would also require all manufacturers, processors, and storage facilities of meat products, edible oils, oilseeds, edible and milled grains, malt and dried pulses to be registered with GACC and be recommended by its country’s competent authority for registration.
The drastic changes with quick timelines to alter exporter requirements could potentially impact trade flows.
Information contained herein is believed to be accurate but is not guaranteed by the parties providing it. Farm At Hand, FarmLink, and their information sources assume no responsibility or liability for any action taken as a result of any information or advice contained in these reports, and any action taken is solely at the liability and responsibility of the user.