(Resource News International) — Canadian canola crush margins have seen steady improvements over the past week, as canola futures have moved lower, but the product values have held firm.
Weakness in the Canadian dollar also contributed to the strength of the margins.
Ken Ball, a grain broker with Union Securities in Winnipeg, said canola has been lagging behind the U.S. market by as much as $30 per tonne, which has improved the margins for domestic crushers.
“Commercial buyers (exports and crushers) do not feel the rally in the soybean oil is sustainable, and they aren’t going to push canola to similar levels, so buyers are just hanging back in canola, they aren’t really pushing it,” Ball said.
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Ball said crushers are very pleased with the current margin.
“It’s the best it’s been at since June,” he said. “Canola to a crusher or export buyer is looking very attractive right now.”
Bill Craddock, a southern Manitoba commodity trader and producer, agreed it’s a good time to be a crusher.
“I think the crushers are doing okay at these crush margins, and it reflects in the fact they are going pretty flat out,” he said.
Canola crush margins relative to the nearby November contract have improved by about $14 per tonne over the past week, to the current level of $79 per tonne above the futures, according to data provided by ICE Futures Canada.
Ball thinks that with the supply that’s out there, the margins could increase.
“If we can get the canola crop that’s out there right now off the field — and it’s a fairly large one — coupled with the carryover, canola supplies will be solid, so buyers will probably hang back a bit,” he said.
Canada has crushed 801,729 tonnes of canola during the current crop year, as of Sept. 22, which compares with 556,184 tonnes at the same time a year ago, according to Canadian Oilseed Producer Association data.
