Declining canola crush margins still strong overall

(Commodity News Service Canada) — Canola crush margins have bounced around a lot over the past few weeks, but are well off their recent highs as sharp declines in the product values have cut into the margins.

Chicago Board of Trade (CBOT) soybeans “go up and down, and we don’t have quite the same swings,” said one canola trader accounting for some of the relative volatility in the crush margins.

Current levels, around $80 per tonne over the futures, were still very profitable despite being well off the C$100-per-tonne profits that crushers were enjoying not that long ago, he said.

“At $80 the crushers are still smiling,” said the broker, “otherwise they wouldn’t keep building and running as close to capacity as they are.”

Domestic crushers were estimated to be covered for canola supplies through the end of January 2011.

Canada, as of Wednesday, has so far crushed 1.77 million tonnes of canola during the current crop year, which compares with 1.13 million tonnes at the same time a year ago, according to the latest Canadian Oilseed Producers Association data.

At the current crush pace, some analysts predict the total crush in 2010-11 will surpass six million tonnes, well above the previous record of 4.8 million set in 2009-10.

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Phil Franz-Warkentin writes for MarketsFarm specializing in grain and commodity market reporting.

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