Steady deliveries into the canola cash pipeline from western Canadian producers have given elevator companies ample supplies for the current crop year ending July 31, which has caused basis levels to widen, and in turn, lower cash bids.
Bill Craddock, a farmer and trader in southern Manitoba, said elevator companies are not looking to buy canola at the moment.
“They don’t even want the stuff right now,” he said. “I get the impression they are very well covered.”
Elevators were not even showing much in the way of interest in new-crop canola, he said.
“Some producers have even tried to sell some new-crop canola at some of the elevators. In one case (elevator) basis levels had been at $45 per ton, but then there was a big rally the other day and it widened the basis $67 per ton. They just didn’t want the product,” he said.
Another factor that has been affecting the waning demand from elevator companies has been a lack of rail cars to hold product, Craddock said.
As an example, he said, “In late March, the elevator in Elm Creek, Man., had not had any cars in 2011, and that is a big elevator — used to be one of the biggest in the country. They just couldn’t take it in even if they wanted it.”
Craddock said he expects to see elevators narrow basis levels after the harvest, once more new-crop supplies become needed. But until then, he said the basis should continue to widen, and the cash prices continue to decline.
“Elevators will just widen the basis, and if you really want to sell it they will take it, but they certainly won’t chase it.”
Current elevator deliveries for canola were $12.76 per bushel in Manitoba, $12.83 per bushel in Saskatchewan, and $13.12 per bushel in Alberta, according to Prairie Ag Hotwire. Those levels range between 14 and 25 cents per bushel lower than one week ago.