Canada's weekly soybean crush is running at a very strong pace, as favourable margins for processing the crop, and tight supplies of canola, cause those plants with flexible capacity in Eastern Canada to increase the percentage of soybeans moving through their facilities.
Canada crushed 46,241 tonnes of soybeans during the week ended Nov. 28, after consistently topping 30,000 tonnes over the past two months, according to data provided by the Canadian Oilseed Processors Association.
That represents the highest weekly level of the past five years that reports are available, and comes in well above the average weekly soybean crush of about 27,000 tonnes. Canada has crushed 503,336 tonnes of soybeans during the 2012-13 crop year to date, which compares with 435,090 at the same point the previous year.
"It's a protein-driven market right now," said a processing company official, accounting for the increased interest in crushing soybeans, which have a higher meal content than canola.
However, he was reluctant to read too much into the weekly numbers and would not comment on how long the increase in the soybean crush might last.
Canada's soybean crushing capacity is primarily situated in Ontario and Quebec, where the bulk of the crop is grown in the country. Processors there are flexible and can also process canola, which is mostly grown in the West.
Tight supplies of canola in Western Canada and unattractive crush margins for the commodity likely caused some processors in Eastern Canada to switch over to soybeans, said oilseed analyst Chris Beckman of Agriculture and Agri-Food Canada's market analysis division in Winnipeg.
Beckman forecasts the country's total soybean crush in 2012-13 at 1.4 million tonnes, but said that number would likely end up larger as the switch to processing more soybeans should continue through the crop year.
"Right now, crushing soybeans is quite a bit more attractive than crushing canola," he said. Using his calculations, soy crush margins were averaging around $100 per tonne, while the canola crush margin was only about $10-$20 per tonne. Processors were seeing profits for crushing canola in the $100 range at this time last year.
Historically, Canada utilizes most of its soyoil and soymeal domestically, but Beckman said exports were possible given the tight situation in the U.S.
-- Phil Franz-Warkentin writes for Commodity News Service Canada, a Winnipeg company specializing in grain and commodity market reporting.