Market Morsel: GM Canola – to plant or not to plant?

Market Morsel

Over the years, I was involved in the work to bring the choice of GM crops to South Australian grain growers, which was ultimately successful. Many opponents of GM crops pointed towards the discount and that having GM crops would ultimately result in huge losses in income. What is the discount at the moment?

I have stuck to Kwinana at the moment, as WA has the largest proportion of GM canola grown in the country.

The first chart below displays the average monthly GM and Non-GM canola prices since 2015. We can see, which is obvious, that they follow a very similar trend. They move in line with one another, with a  correlation of 0.97, with 1 being perfect and 0 being no correlation.

The second chart below shows the GM spread as a percentage. The average spread has been a 9% discount to GM since 2015. It has at times been as high as 18%. The third chart below shows the GM spread at harvest.

This is probably the most important time period, as in reality, this is when most canola will be sold. The market is currently at an 8% discount which is slightly below average.

I always like to stay in my lane as a market analyst, but the important thing to consider when growing GM canola is that the agronomic benefits will outweigh a 9% discount. If it does, then it’s worthwhile growing.

At least growers throughout Australia (excluding Tasmania) have the choice of what they grow.