Crush margins for processors in Western Canada have once again improved, which is helping to maintain high demand for the commodity at local processors.
“Based on my calculations, crush margins for canola basis the July contract have improved significantly over the past month to around the $40 per tonne area,” said Bill Craddock, a southern Manitoba farmer and private commodity trader.
In early April, crush margins for processors had been running in the $23 per tonne range, but had also dropped to as low as $18 per tonne during that time frame. At the same time a year ago crush margins for processors had been running in the $75-$85 per tonne level.
Craddock linked the improvement in margins to U.S. soybean values undergoing an upward price push and canola values being reluctant to follow suit. The increase in the value of the Canadian dollar did temper some of the crush margin improvement.
There also appears to be more canola around then what the numbers are suggesting, making it possible for the processing sector to secure supply and meet commitments, said Mike Jubinville, an analyst with ProFarmer Canada.
Cash bids for canola at elevators have eased somewhat, he noted, but they continue to hold at fairly high levels if the processors are involved.
Figures from the Canadian Oilseed Processors Association, for the week ended May 1, revealed 5.291 million tonnes of canola have been crushed so far in the 2012-13 crop year. That was slightly ahead of the 5.176 million-tonne pace at the same time a year ago.
Agriculture and Agri-Food Canada, in its April supply/demand table, pegged the 2012-13 canola crush at 6.5 million tonnes, which would be down from the 6.9 million-tonne pace seen in 2011-12. For 2013-14, Canada’s canola crush was seen hitting a record seven million tonnes based on AAFC projections.
— Dwayne Klassen writes for Commodity News Service Canada, a Winnipeg company specializing in grain and commodity market reporting.