(Resource News International) — Canola cash basis levels have been firm across Western Canada with the strongest levels in Alberta and western Saskatchewan, where the dryness has prompted the strength, traders and brokers said.
They also noted, though, that basis prices have seen some volatility and that producers should be prepared to make phone calls in order to capture the best levels.
Brian Wittal of Pro Com Marketing in Alberta indicated that current basis levels do not fully reflect the drought problems in the area, but that two more weeks of dryness will force elevator companies to improve their basis to reflect the drought conditions.
In the past week, the Alberta cash basis for nearby delivery has been as high as $10 over futures in the Calgary region as companies attempt to attract supplies out of farmer’s hands for current demand. New-crop basis levels have ranged from $10 under to $2 per tonne over, with some current bids available at $1.99 per tonne over futures for January delivery.
However, at the other end of the Prairies in Manitoba, where excess moisture has been a problem, basis levels are generally at a small discount to futures, although premiums of $2 per tonne have appeared for July and August canola deliveries. Old-crop export demand continues to support those values.
While crushers have the best posted new-crop bids, farmers are indicating that elevator companies are matching crushers and are aggressive, but are unwilling to post the bids.
“You have to walk in and be willing to sign a contract before you get the best price at the elevator,” said Bill Craddock, a farmer in south-central Manitoba.
Currently new-crop canola basis levels in Manitoba are $18-$19 per tonne under the futures, which producers indicate is better that the usual level of about $30 under futures at this time in a normal year.
“I think that the market has definitely built some of the drought problems (in Alberta/Saskatchewan) into our (Manitoba) prices,” said Craddock. “Also, we have lost acres in the Interlake due to excessive wetness.”
According to Prairie Ag Hotwire, cash bids for current delivery for canola are ranging from $10.05 to $10.21 per bushel in Manitoba, $9.44-$10.41/bu. in Saskatchewan and $10.30-10.77/bu. in Alberta. These are up on the month because of the demand at the West Coast, cash dealers say.
New-crop bids are ranging from $9.90 to $9.99/bu. in Manitoba, $9.36-$10.30/bu. in Saskatchewan and $9.94-$10.23/bu. in Alberta. The bids have actually weakened off a bit, as cash dealers feel companies are still trying to assess the demand side of the market as well as the size of canola crop before getting aggressive.