Canadian canola crush margins are currently at some of their best levels of the past year — keeping domestic processors showing good demand in both the futures and in the cash market.
Crush margins provide an indication of the profitability of the product values relative to the seed cost when processing canola, with exchange rates also factoring in to the equation.
As of Tuesday (Nov. 26), the canola board crush margin calculated by ICE Futures Canada was $110 above the nearby January contract and $98 above March.
The current margins represent an improvement of over $10 compared to late October and are almost double the margins being reported at this point a year ago, when the margins were only about $60 above the futures.
Weakness in the Canadian dollar — which was below US95 cents on Tuesday — along with strength in many global vegetable oil markets, and the fact that the rangebound canola futures market has lagged CBOT soybeans to the upside recently, have all contributed to the favourable crush margins, according to one canola broker.
Crushers, he added, were offering some of the best basis opportunities in Western Canada.
— Phil Franz-Warkentin writes for Commodity News Service Canada, a Winnipeg company specializing in grain and commodity market reporting.