Crush margins gain strength with crop concerns

Canola crush margins have seen some upward movement over the last week, thanks in large part to the seeding concerns across the Canadian prairies.

Canola crush margins for July were bringing $86.48 per ton as of June 6, according to ICE Futures Canada. That compares with $77.67 per ton a week ago, and $78.22 per ton a month ago.

Ken Ball, a grain broker with RBC in Winnipeg, said strength in the canola market last week was behind the strength of the crush margins.

“Canola built in a bit of a premium. It’s a reflection of the likelihood that we won’t get all of the canola acres in on the Canadian Prairies,” Ball said. “There was a little commercial coverage and certainly some speculation (about supplies) behind the upswing.”

Asked if end-users had increased purchases, Ball said although he couldn’t tell for sure, a small boost was likely.

“They have probably picked up some demand given the seeding concerns, as guys will probably only plant canola for another week or two,” he said.

He added that with where margins are right now, the end-users are not backing away from purchasing.

“They are still reasonable, although towards the lower end of the range over the last little while,” he said. “There’s really no reason for buyers to balk because of poor margins, but they aren’t as good as they have been.”

According to the Canadian Oilseed Processors Association, there had been a total of 5,019,653 tons of canola crushed in the current crop year up to June 1, compared to 3,726,109 a year ago.

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