WINNIPEG — Canola crush margins in Western Canada may be well off the highs seen last winter, but levels are still profitable for domestic processors as they hover around $100 per tonne above the futures.
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 Jan. 6, the Canola Board Crush Margin calculated by ICE Futures Canada was at about $101 above the most active March contract. In recent weeks, margins have generally ranged within $10 of either side of $100.
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At this time a year ago, the margins were about $135 per tonne above the futures, but eventually widened out to as much as $235 per tonne in February when logistics issues hampered rail movement across the Prairies.
While the current margins are a far cry from those highs, “at these levels, no matter what the other numbers are, the crushers are doing great,” said a canola trader. “Anytime the crush margins are at $100, the crushers are doing OK.… If they weren’t doing OK, they wouldn’t be doing 130,000 to 140,000 tonnes a week and they wouldn’t be building new crushing plants or expanding old ones.”
He added that if average basis levels widen out because the futures price is too high for the export market, it will add to the profits for the crushers. The crushers are able to move the seed through their system much faster than the line companies moving canola to Vancouver for export, which leads to reduced carrying charges.
