Canola basis levels to fluctuate

Canola basis levels in Western Canada have been fairly unattractive and stable of late, but one analyst believes there could be a narrowing within the next month or so.

Mike Jubinville, president of Pro Farmer Canada in Winnipeg, said it looks as though basis levels could begin to narrow once the calendar hits mid-June and July.

“Carryout stocks are projected to be at around one million tons, which is on the low end of the spectrum,” Jubinville said. “I think companies will just be looking to ensure that they are well covered in terms of supplies.”

Looking farther down the road, Jubinville said basis levels are likely to widen again around September, which is historically the case, given many producers will haul grain to elevators directly off the combine during harvest time, so companies should be well covered.

Once the initial surge of supplies is in from the harvest, Jubinville said levels are likely to narrow once again, in the October or November time frame.

Asked why there had been such little movement over the last couple of months in basis levels, Jubinville said there were a couple of reasons.

“First of all, there has been very little movement in the futures market. Prices are just kind of going back and forth, with no real direction,” he said.

“As well, demand from China, for oilseeds in general, has been very poor of late, so companies hadn’t had to fill orders for product.”

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