CNS Canada –– Canola crush margins have shown some improvement over the past week, despite rising futures prices, as strength in product values and a weakening Canadian dollar should be boosting the profitability of the domestic crush sector.
Crush margins provide an indication of the profitability of the product values relative to the seed cost when processing canola, with exchange rates also factoring in to the equation.
As of Friday, the Canola Board Crush Margin calculated by ICE Futures Canada was at about $53 above the November contract, which compares with levels closer to $38 a week earlier.
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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.
During that same period, the November canola contract increased by over $10 per tonne, which would normally cut into crush margins.
However, vegetable oil markets climbed sharply over the week, while the Canadian dollar lost two-thirds of a cent relative to its U.S. counterpart.
While the improving margins should help keep cash bids relatively firm, the margins are still well off the levels seen at the same time a year ago.
— Phil Franz-Warkentin writes for Commodity News Service Canada, a Winnipeg company specializing in grain and commodity market reporting.
