Crush margins dependent on outside markets

After falling a week or two ago, canola crush margins have seen a rebound, thanks to an increase in ICE Futures Canada canola contracts, along with soybean and soyoil contracts on the Chicago Board of Trade (CBOT).

Bill Craddock, a trader and producer in southern Manitoba, said where the crush margins go has a lot to do with what’s happening in outside oilseed markets.

“It depends which way the market is going. We don’t tend to stay in line with the crush. If the U.S. is strong, the crush seems to go up, and if the U.S. is down, margins go down,” he said.

“The (CBOT) soyoil has a big impact on margins, and it’s been approaching the US60 cents per pound level, so that has been positive.”

Craddock said he expects to see the markets increase over the next little while, as there is considerable uncertainty about acreage for canola and soybeans this spring.

“I think we are moving into the time period where there are concerns about what producers are going to plant this spring both in Canada and the U.S., and it is a big uncertainty.

“Canola looks good at 12 or 13 per bushel, but wheat at nine and oats at 3.5 looks good, too,” he said. “When you weigh it out, canola always costs more to produce. You will likely get a better return out of the grains than canola. Of course if canola goes higher, that is good news for crushers.”

Current crush margins are C$85.01 per tonne, according to ICE Futures Canada. That compares to C$79.63 per tonne one week ago.

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