(Resource News International) — Canola crush margins have improved over the past week, despite the strong Canadian dollar, and appear set to hold around their current levels, according to a trader who follows the margins.
Crush margins provide an indication of how much money processors are making at any given time, by factoring in the cost of canola seed compared to the value of the resulting oil and meal. Exchange rates are also a part of the equation.
ICE Futures Canada canola board crush margin against the May futures contract on Thursday was sitting at around $103 per tonne above the futures, which compares with the low for the year set a week ago of around $97.
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The canola trader said adjustments in both the canola futures and the CBOT (Chicago Board of Trade) soy complex were helping keep crush margins at their relatively favourable levels, despite the fact that the Canadian dollar continues to test parity with its U.S. counterpart.
“With all things being equal, the crushers are probably doing okay at this level,” said the trader, adding that margins will likely stay in a range of $100-$110 above the nearby futures.
The strong domestic crush pace, which continues to top 100,000 tonnes per week, was an indication that the domestic crushers were showing strong demand for canola, he said.
As a result, he said, farmers could reasonably expect the pricing opportunities offered by the crushers to remain strong.
“They need to keep their price in line with everybody else so that they can keep stuff coming up the driveway,” he added, noting “basis levels have been pretty steady all winter, and the crushers are usually a little better.”
