CNS Canada — Canada’s canola crushing pace jumped to its highest level in six months during the week ended Wednesday, according to data from the Canadian Oilseed Processors Association (COPA).
Domestic crushers processed 153,102 tonnes of canola during the week, up more than five per cent from the week prior, COPA data shows. The last time the crush pace was higher than that was during the week ended July 31, 2014, when 169,707 tonnes of canola were processed.
The strong crushing pace could be related to crush margins remaining steady due to a falling Canadian dollar. The loonie fell more than two and a half cents relative to the U.S. dollar during the week of Jan. 14 to 21.
The Bank of Canada’s decision to unexpectedly cut interest rates was one of the driving forces pushing the loonie down, as were ongoing weakness in crude oil and worries about slow global economic growth.
According to data from ICE Futures Canada, the Canola Board Crush Margin was at about C$98 above the most active March contract on January 21. That was up from the week prior, and month-ago levels ranging from C$91 to $95 above the March future.
If it weren’t for the weak Canadian dollar, domestic crush margins wouldn’t be able to sustain their current levels, according to a trader.
“It’s the Canadian dollar that has kept the crush value at all in line. If you were to put it in at par (with U.S. currency), the crush margins would be under water big time,” the trader noted.
The crush margins would be much lower without the weak loonie because ICE Futures Canada canola futures continue to outpace Chicago soybean and soyoil futures to the upside.
The March canola contract settled Friday at C$461.50 per tonne, up almost $11 per tonne compared to the week prior.
To compare, the March Chicago soybean contract was at US$9.7275 per bushel on Friday, down 19 cents per bushel from last week. March soyoil closed at 31.6 cents per pound, from 33.39 cents the week prior.
— Terryn Shiells writes for Commodity News Service Canada, a Winnipeg company specializing in grain and commodity market reporting.