September 30, 2010

Canada's rapeseed crush margin seen impressively high

As rapeseed futures have moved lower, Canadian rapeseed crush margins have seen steady improvements over the past week, but the product values have held firm.

Weakness in the Canadian dollar also contributed to the strength of the margins.

Ken Ball, a grain broker with Union Securities in Winnipeg, said rapeseed has been lagging behind the US market by as much as US$30 per tonne, which has improved the margins for domestic crushers.

"Commercial buyers (exports and crushers) do not feel the rally in the soyoil is sustainable, and they aren't going to push rapeseed to similar levels, so buyers are just hanging back in rapeseed, they aren't really pushing it. It's the best it's been at since June. Canola to a crusher or export buyer is looking very attractive right now," Ball said.

Bill Craddock, a southern Manitoba commodity trader and producer, said, "I think the crushers are doing okay at these crush margins, and it reflects in the fact they are going pretty flat out."

According to data provided by ICE Futures Canada, rapeseed crush margins relative to the nearby November contract have improved by about US$14 per tonne over the past week, to the current level of US$79 per tonne above the futures.

Ball thinks that with the supply that's out there, the margins could increase.

"If we can get the canola crop that's out there right now off the field-and it's a fairly large one-coupled with the carryover, canola supplies will be solid, so buyers will probably hang back a bit," he said.

According to Canadian Oilseed Producer Association data, Canada has crushed 801,729 tonnes of rapeseed during the current crop year, as of September 22, which compares with 556,184 tonnes on-year.