Good demand for Canadian canola just across border

CNS Canada — Logistics issues and resulting poor prices continue to cause problems for Prairie farmers with canola to sell — but better values can be found just across the U.S. border.

Northstar Agri Industries runs a canola crusher at Hallock, Minn. — about 40 km southeast of the Canadian border crossing at Emerson, Man. — with the capacity to process 420,000 tonnes of canola annually.

Northstar is currently offering basis levels of US$8 above the March futures for nearby delivery, and only US$5 below the May futures for April and May delivery. That compares with the Bunge Canada plant 80 km away at Altona, Man., where nearby basis is C$30 below the futures and May delivery is C$20 below.

“With the (Canadian) export channels bottled up, there is a lot of interest from farmers and others in southern Manitoba to re-evaluate markets south of the border,” said Northstar president Neil Juhnke.

Rail service moving oil and meal out of the plant had been a bit constrained in December and early January, due to cold temperatures and blizzards, but since the beginning of February, service has improved and they are operating at full capacity, he said.

“From a logistics standpoint, our biggest issue is cross-border trucking,” he said, but added that there was a FOB program in place to pick up canola directly from Canadian farmers, while the company would also help with any necessary paperwork.

“There are always extra opportunities, but you need to find them,” said one Manitoba farmer. He said the Minnesota plant was one such opportunity, but he was reluctant to cross the border himself given the distance and some of the weight restrictions in place.

However, Winnipeg-based North American Food Ingredients (NAFI) is paying “50 to 60 cents (per bushel) more than anyone else,” said the farmer, noting the company was buying Canadian canola and moving it to the U.S. plant. “The trucks are pouring into NAFI and pouring out,” he said.

Tom Sawatzky, general manager of NAFI, said the Hallock plant was offering competitive prices for Canadian canola, making the current trucking arrangement possible for both companies.

“It’s about relationships… Right now it’s good times for them and bad times for us,” he said.

— Phil Franz-Warkentin writes for Commodity News Service Canada, a Winnipeg company specializing in grain and commodity market reporting.

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