(Resource News International) — Crush margins for canola in Western Canada have lost some additional ground, and if the Canadian dollar continues its appreciation, further declines are likely in the cards.
“Based on the way I calculate margins, the crush for the spot month as of Friday was in the $74.20 per tonne range,” said Bill Craddock, an independent trader and south-central Manitoba producer.
That’s significantly lower than the $84 margin seen in early July and was the lowest since July 15, when margins were only $73.25 per tonne.
Margins the previous month at the same time were around $103.50, while a year ago processors were working with a crush margin of $107.50.
The weakening of the profit margin for crushers was being associated with the fact that the price of the canola meal and canola oil was declining, Craddock said. Losses in U.S. soymeal and soyoil also have been working against the margins.
The strengthening in the value of the Canadian dollar, meanwhile, has been the biggest factor working against the profit margin of processors, Craddock said.
However, despite the easing of the crush margin for domestic processors, the basis levels being offered to producers has not necessarily widened out.
“What the domestic processors and elevator companies are offering for canola really depends on who wants the canola and how bad the canola is needed,” he said.
As of July 22, estimates from the Canadian Oilseed Processors Association (COPA) indicated 3.945 million tonnes of canola had been crushed so far during the 2008-09 season. This compares with 3.908 million tonnes at the same time in the 2007-08 season.
Year-to-date crush capacity utilization for canola was pegged by COPA at 90.9 per cent, which would be down slightly from the 92.5 per cent level at the same time a year ago.