Canola basis levels steady at the moment

The steadying of canola futures prices on the ICE Futures Canada trading platform in Winnipeg has stabilized canola basis levels.

Mike Jubinville of Pro Farmer Canada in Winnipeg said basis levels are fairly decent at the moment, thanks to a solid amount of product in the commercial pipeline.

“We currently have 1.5 million metric tonnes of canola in the pipeline, compared to one million at this time last year,” Jubinville said. “Demand has been solid, but right now end-users have enough to fill their needs.”

“The risk of basis levels widening out are fairly low,” said Errol Anderson, president of ProMarket Communications in Calgary. “There are limited risks right now for the grower.”

Farmers have been delaying deliveries of product, Jubinville said, as they have been holding out for higher prices. If they continue to hold off, the supplies in the pipeline will eventually wear thin, which could send the price of canola higher, he said.

If canola prices see a large increase in value, the basis levels would then widen, as Anderson said, “It’s more of a futures driven market.”

Jubinville said he wouldn’t be surprised to see the futures price of canola go higher, as end-users continue to use product at record amounts.

Anderson also said the outlook for basis levels is pretty good right now.

“We are heading into spring, and that’s the time when basis levels will seasonally narrow, and improve at that time,” Anderson said.

Basis levels can currently be found across Western Canada ranging from $22 to $42 per tonne under the nearby March futures contract for February delivery.

Basis opportunities generally narrow in ahead of the new crop, with June/July opportunities in the $7 to $28 per tonne level under the futures, depending on the location.

Current elevator deliveries for canola were bringing as much as $13.06 in Manitoba, $12.99 in Saskatchewan, and $13.13 in Alberta, according to Prairie Ag Hotwire.

On the ICE Futures Canada trading platform, the nearby March contract was trading at $603.90 per tonne at the close of trade Friday.

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