South Australia’s GE Free canola sweet spot

A BUMPER canola crop in the 2011-12 season saw record exports and high prices for South Australia’s GM Free canola, following strong international demand in international markets.

 

Article by PETER TUSTIN, COMMODITY TRADER, GLENCORE GRAIN
Stock Journal Online, 16 August 2012

It was a stellar year that has seen exportable supplies exhausted with still a quarter of the season left to go. The reasons for SA’s strengths in the global market for canola are worth reflecting on.

SA canola’s non-GM status means greater market access and flexibility.

There is always international demand for SA canola. In the 2011-12 season, Australia produced about 3.3 million tonnes of GM and non-GM canola, but global demand is much bigger than our crop alone. The European market is the biggest demand base, consuming more than 20 million tonnes of canola and rapeseed for biodiesel production and food use.

Strong European demand provides a secure niche market for SA because Europe’s requirements are predominantly for non-GM canola. Other major exporting countries, such as Canada, which produced more than 15 million tonnes of GM canola last year, find it extremely difficult to export large volumes to Europe because of their GM status. This often results in price premiums for SA non-GM canola.

Irrespective of GM or non-GM, global demand for canola is increasing year-on-year and SA non-GM has the advantage of flexibility. SA non-GM canola can be exported without limitation to destinations that consume GM canola, such as Pakistan, the United Arab Emirates, Japan and throughout Asia. It simply becomes a function of which destination is paying the highest price.

So SA is in the box seat to capture the best price from any destination in the global market. In addition, deep water ports, such as Port Lincoln and the Outer Harbour terminal, are capable of loading the large Panamax vessels that carry up to 65,000t of canola. This provides freight advantages compared with smaller, shallower ports.

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