Canola crush margins deteriorate

Winnipeg (CNS Canada) – Canola crush margins have deteriorated over the past few months to hit some of their weakest levels of the past two years. However, domestic processors continue to show good demand despite their declining profit-margins.

As of June 18, 2017, the Canola Board Crush Margin calculated by ICE Futures Canada was about C$44 above the July contract, which compares with levels a month ago of roughly C$60. At this time a year ago, the nearby crush margin was C$70 above the futures.

The new crop margins have also lost ground over the past few months, with canola delivered against the November contract currently seeing a margin of C$64 above the futures. That’s off by about C$40 from the new crop margins at this time a year ago.

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.

While current margins are well below the C$100-plus levels seen more-often-than-not in recent years, a trader noted that they were still looking good from a historical perspective. In the early 2000s crushers were breaking-even or even losing as much as C$10 per tonne on the crush at some times.

He added that domestic processors were still showing solid demand and continued to crush canola at an active pace. A total of 8.09 million tonnes of canola have been processed during the crop-year-to-date, which compares with 7.93 million at the same point a year ago, according to Canadian Grain Commission data.

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