AS HARVEST draws near, production forecasts are starting to narrow and the supply and demand outlook is gaining clarity.
Victoria is increasingly becoming dependent on the grain produced in the Western District, south of the Great Dividing Range.
The impact of the dry spring is now spreading south into the Western District, which is expected to produce about a third of Victoria's canola crop and 15 per cent of the wheat and barley crop.
Yields for all crops slipped during October.
Victoria's feed-barley crop is expected to be less than one million tonnes, leaving none for export and driving speculation the state will have to import grain.
It's still too early to see what feed-quality grain is going to be produced in Queensland and Western Australia, as receivals are very light at this stage.
The continuing drought is pulling back production forecasts for the national canola crop. Industry estimates now put Australia's canola production at 1.505 million tonnes - down 9 per cent from last month. The Victorian forecast is down to 270,000 tonnes - a steep 22 per cent fall from last month.
Canola crops in the Riverina, Mallee and Wimmera are suffering. Crops in northern Victoria are now in late flowering and many will struggle to see a header.
Canola crops in western Victoria still require rain to finish the crop. The current lack of demand for canola hay and silage is causing growers to hesitate when considering the fodder option.
Traders estimate foreign imports of oilseed will not be needed for oilseed crushers in Victoria. However, seed from southern NSW and South Australia will supplement local production for a potential small export program.
In the west, growing-season rainfall has been realised and Western Australia is expected to produce 54 per cent of the nation's canola crop.
Canola prices have had a similar fall to cereal grain prices. Canola is now priced at about $570 a tonne, delivered to port. This is a fall from $800 a tonne - the contract highs reached in late February.
While grain production forecasts are falling in Australia they are also expected to be 28 per cent lower than last year in Argentina. Despite this, international markets continue to fall in the face of poor short-term demand.
The impact of these price falls is being buffered by the weakening of the Australian dollar and falling ocean freight rates. For example freight rates to Saudi Arabia, a key feed-barley market have fallen around US$15 a tonne over the past three weeks.
