Winnipeg, Oct. 22 (MarketsFarm) – Canola crush margins have shown considerable improvement in recent weeks, which is a sign that the commodity is looking cheap compared to its product values.
As of Oct. 21, 2019, the Canola Board Crush Margin calculated by ICE Futures U.S. was about C$100 above the November contract, which was up by C$10 over the past month and compares with year-ago margins of only C$45 per tonne.
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 into the equation.
Read Also
CBOT Weekly: China, shutdown guiding the market
The United States grain and oilseed markets are currently dominated by two factors, said Ryan Ettner, broker with Allendale Inc. in McHenry, Ill. Ettner said those are the absence of a trade deal with China and the ongoing United States government shutdown.
“Crush margins are way up from this time last year, which will help the crusher,” said a canola trader. “At the same time, they don’t have to compete with the exporters,” he added, noting that the wide margins might not necessarily translate into an increase in canola prices.
Domestic crushers processed 214,500 tonnes of canola during the week ended Oct. 13, according to the latest data from the Canadian Grain Commission. That marked largest weekly total in two months. Total domestic usage during the 2019/20 crop-year-to-date of 2.02 million tonnes is about 400,000 tonnes ahead of what was crushed during the same timeframe the previous year, according to CGC data.
