Canola basis levels widen out approaching harvest

CNS Canada — Canadian canola production is forecast to be lower than expected at 13.9 million tonnes, according to a crop production report from Statistics Canada last week. However, the drop in production numbers appears to have had little impact on basis levels.

“I think maybe basis levels tightened up a little bit, but I don’t think we’ve seen any immediate impact on basis levels because of that report,” said Reid Fenton of BLB Grain Group at Three Hills, Alta. Until now, he added, the basis levels have been fairly tight this summer.

Basis levels “narrowed in there around the end of July, and now they’ve widened out, at least in our area for September, October, November (futures),” he said.

Basis levels for January, February and March are looking good, although nothing outstanding, he said.

“They’re not the best that we’ve ever seen by any stretch but they’re definitely (good).”

Many canola producers are reluctant to sell to the market as of right now, Fenton said.

“A bunch of guys have pre-sold some and that’ll get delivered when they harvest it, depending on space at the elevator,” said Fenton. “I’d say farmers are reluctant sellers below $10 per bushel, which I don’t think there’s anything out there right now that it is even close to $10 per bushel.”

Right now spot bids range from $8.30 to $9.80 per bushel, according to Prairie Ag Hotwire.

Harvest has begun for some crops in Alberta, including peas, but not for cereal crops or canola.

“I would say by the end of next week harvest will be general in our area,” said Fenton. “Guys are starting to combine peas here, no cereals yet. Canola is just starting to get swathed here last week… If the weather holds, we’ll be (harvesting) on canola probably mid-next week.”

Harvest progress in Saskatchewan, Canada’s largest canola producer, is coming along as well, with just over one per cent combined and four per cent swathed or ready to cut, according to a recent crop report from Saskatchewan Agriculture.

Swathing of canola is also underway in Manitoba, according to a recent report from the provincial ag department.

— Marney Blunt writes for Commodity News Service Canada, a Winnipeg company specializing in grain and commodity market reporting.

 

 

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