Crush margins for canola to improve

(Resource News International) –– Crush margins for canola in Western Canada have varied widely over the past month, although the weakening of the Canadian dollar over the past few days has raised hopes of an improvement in those levels.

“Based on the way I calculate margins, the crush for the spot month as of Wednesday was in the $111 per tonne range,” said Bill Craddock, a south-central Manitoba producer and commodity trader. This was slightly better than the $109-$110 level seen earlier this week.

Crush margins a month ago were in the $125-$132 range and compare with the $115 level seen at the end of October.

The profit margins for crushers has been directly impacted by the price trends established by U.S. soymeal and soyoil.

The strengthening of the Canadian dollar up until this week had been one of the factors working against the profit margins of processors, Craddock said. “They are obviously hoping the Canadian dollar continues its retreat in value.”

“What the domestic processors and elevator companies are offering for canola really depends on who wants the canola and how bad the canola is needed,” he said.

As of Jan. 13, estimates from the Canadian Oilseed Processors Association (COPA) indicated that 1.757 million tonnes of canola had been crushed so far during the 2009-10 season. This compares with 1.856 million tonnes at the same time in the 2008-09 season.

Year-to-date crush capacity utilization for canola was pegged by COPA at 75.4 per cent, which was down significantly from the 93.3 per cent level at the same time a year ago.

Craddock cautioned, however, about reading too much into the utilization rate being down from the year-ago level, given that crush capacity in Canada has increased significantly from the year-ago level, accounting for the lower percentage.

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