With canola values on the rise over the past week, crush margins have taken a hit, falling to their lowest point in the current calendar year.
Bill Craddock, a southern Manitoba trader and producer, said this has been a bad week for those in the crushing sector.
“There has been strength in the canola, relative to soyoil and soymeal,” he said. “The Canadian dollar has been up a bit too, as opposed to where it had been.”
The decline in the margins is likely to take those in the domestic crushing sector out of the market for the time being, which is likely to have a negative effect on canola values, he said.
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To Darcy Haley, vice-president of Ag Value Brokers in Lethbridge, there are two main reasons for recent increases for feed barley and wheat. Haley said on March 12 that there’s an ongoing lack of farmer selling, plus stiff competition from the grain companies looking to export barley.
“Demand won’t be there from the crushers. They should have bought up good amounts of quantity so they don’t have to chase it when it is higher like it is at the moment,” he said. “We may have seen our highs for canola futures for the next little while.”
Although margins aren’t as strong as they have been, crushers would still be making money, according to Craddock.
“They would still make a profit, but it’s not as favourable as it has been earlier this year,” he said.
Canola crush margins are currently at $77 above the nearby May contract, according to ICE Futures Canada. That is $11.99 lower than just one week ago.
