Canola crush margins in Canada have steadily increased over the past week, thanks to ongoing demand from domestic processors, as well as a sharp decline in the Canadian dollar.
Canola crush margins for the November/October 2011 contract are bringing $97.54 per tonne, $8.90 per tonne higher than just a week ago, according to ICE Futures Canada.
Bill Craddock, a Winnipeg-based trader, said crushing capacity continues to grow in Canada, which has obviously ramped up demand.
Bunge’s crush plant in Altona, Man. is looking to double its capacity, which is just adding to the growing demand, he noted.
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In the 2010-11 crop year, a total of 5.99 million tonnes of canola were crushed in Canada, which was an all-time record. It’s widely expected another crush record will be set in the current 2011-12 year.
“All of this demand from processing plants is going to keep margins high going forward,” Craddock said.
Another factor that has been improving values is a decline in the Canadian dollar.
After eclipsing the US$1.06 level about two weeks ago, the loonie has come crashing down, falling below parity at one point this week. The Canadian dollar is currently just slightly above the US$1.01 mark.
The weaker Canadian dollar makes processed product more attractive to buyers from other countries.
