Despite taking a step back at the end of the week due to vegetable oil weakness, the July canola contract jumped C$15.60 per tonne compared to the past week at C$639.40 on April 24. However, the contract reached C$652.90 earlier in the day, its highest level since March 26.

Ken Ball of PI Financial Services in Winnipeg said canola’s rise was surprising considering crush margins dropped more than C$20 per tonne over the past week. He said while growers’ concerns over dryness in the Prairies may have had an effect, the funds and canola crushers may have played a bigger part.

“Probably a combination of speculative money and a little bit of short-covering in canola. I think it might have been spreaders who were short canola,” Ball said. “It could also be crushers. Crush indexes in the futures contracts are at their lowest levels in more than a year, but they’re still relatively high historically.”

There is still opportunity for canola to go higher, according to Ball. It will happen if either soyoil prices rise or adverse weather appears during the summer.

“Assuming we do get some ‘weather scares’ in June or July, which we usually do, hopefully we’ll get some rain and things will be pretty good. But we’ll get some scares, especially when it starts to warm up,” he said.

If the July contract exceeds C$650/tonne, it could be a sign that the C$700 mark would be in sight, according to Ball, especially if hot and dry weather continues on the Prairies. However, if the Prairies see healthy amounts of rain in the coming weeks, which appears less likely for now, the July contract could fall to C$620.

In order for canola to regain positive price momentum, it would need some help from vegetable oils.

“All the vegetable oils need to be much firmer than they have been of late. Palm oil had been stronger earlier in the year, but it retraced half of those gains by now,” Ball explained. “Canola’s just going to need some better help to go higher at this stage. Later on, it might be able to muster up some strength to go on its own if the weather proves to be a bit threatening.”

—Adam Peleshaty reports for MarketsFarm from Stonewall, Man. 

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A total of 10.523 million tonnes of canola were crushed in the country in 2023, which was up by 20.0 per cent from the previous year and above the previous record of 10.290 million tonnes set in 2020.

Meanwhile, Canada’s soybean crush decreased by 5.7 per cent in 2023 to 1.763 million tonnes. Oil production totalled 4.422 million tonnes for canola and 329,856 tonnes for soybeans. Meal production totalled 6.200 million tonnes for canola and 1.371 million tonnes for soybeans.

High prices and increased exports of canola oil were behind the strong canola crush pace, according to StatCan. In 2021, the price of canola oil increased by 65.2 per cent over the previous year, and it has remained elevated ever since. In 2023, Canadian exports of canola oil increased 20.3 per cent from 2022, totalling 3.150 million tonnes. This trend was underpinned by higher supplies of canola, as production of canola was 31.2 per cent higher leading into 2023 than in the previous year.

In the United States, over the 2023 calendar year, oilseed processors crushed 61.268 million tonnes of soybeans which was up by 2.6 per cent from the previous year. A total of 2.059 million tonnes of canola was crushed in the U.S, marking a 19.2 per cent increase from 2022. Oil production totalled 12.052 million tonnes for soybeans and 825,227 tonnes for canola, while meal production totalled 45.241 million tonnes for soybeans and 1.198 million tonnes for canola.

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The Calgary-based company said the facility will produce 20,000 barrels per day of renewable diesel and is expected to start production in 2025.

Imperial expects regulatory approval for the project, first announced in August 2021, in the near-term.

The facility will use low-carbon hydrogen and biofeedstock combined with a proprietary catalyst to produce the renewable diesel, which Imperial says will reduce greenhouse gas emissions by roughly three million tonnes a year compared with conventional fuels.

The low-carbon hydrogen will be produced with carbon capture and storage technology and supplied by Air Products.

Imperial is developing agreements with third parties for biofeedstock supply. Jon Wetmore, Imperial’s vice-president for downstream, said the project had moved forward quickly to help secure feedstocks such as canola, which needs to be run through crush plants and turned into canola oil before being used.

“Early mover advantage does help, we’re aware at some point there might not be enough crush capacity for all the renewable diesel projects being contemplated in Canada,” Wetmore told Reuters in an interview.

Alberta is already home to canola crushing plants including those of Cargill at Camrose, Richardson International at Lethbridge and ADM at Lloydminster.

Crush capacity is expected to increase also in neighbouring Saskatchewan, where Richardson plans to double its handle at Yorkton, while Cargill and Viterra each plan facilities in the Regina area.

The Strathcona project will be partly funded by credits granted under British Columbia’s provincial Low Carbon Fuel Standard, and a “significant portion” of the diesel produced will be supplied to B.C. to help Alberta’s other neighbouring province meet its emissions targets.

Site preparation and initial construction are underway and the project is expected to create about 600 direct construction jobs.

“We view this as a neutral impact for now given the capital outlay and the long-term adoption, appreciating that Imperial continues to make strategic investments to reduce emissions from its own operations,” National Bank analyst Travis Wood said in a note to clients.

— Reporting for Reuters by Nia Williams and Sourasis Bose. Includes files from Glacier FarmMedia Network staff.

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That’s especially so with declines over the last few weeks in Chicago soyoil, Malaysian palm oil and European rapeseed, he said.

“No one is really interested in buying canola at these prices. It’s ludicrously overvalued,” Ball said.

Spec longs are hoping there will be a break in the vegetable oil market, in which prices would then climb higher and allow those specs to hang onto their canola contracts, he said.

“There’s definitely a trigger point where these guys have to get their money out of here,” he stressed, adding prices could easily tumble by $50-$70 per tonne very quickly.

“The massive long position continues to build. It’s extremely vulnerable to a really severe collapse. Unless [the specs] have enough money, saying we’re not letting it go.”

Other than the spec longs, Ball said no one else is buying canola, including the commercials. Crushers are now net sellers and export sales are near zero, he said.

“It’s bending, but it’s not breaking.”

Canola futures could plummet by $100 per tonne and still be doing an effective job in rationing demand, he estimated.

— Glen Hallick reports for MarketsFarm from Winnipeg.

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Four months into the 2019/20 marketing year, which began Aug. 1, more than 3.3 million tonnes of canola have been crushed, according to the report released Dec. 19. That’s a jump of 8.5 per cent when compared to this time the previous marketing year.

However, the November canola crush at 829,303 tonnes was down by almost six per cent from the previous month.

The amount of canola oil produced rose 8.4 per cent from year to year, with production having reached in excess of 1.4 million tonnes by the end of November. Canola meal production was up nearly 8.8 per cent to more than 1.8 million tonnes.

A major factor behind the increased crush has been the dramatic jump in crush margins this fall. Margins in November were approximately double the values of those a year ago, according to data from the Intercontinental Exchange (ICE). During the month, margins ranged from the high C$90’s to the low C$110’s.

That domestic usage helped reduce the overall impact of China’s ban on canola imports through Richardson International and Viterra. Agriculture and Agri-Food Canada’s (AAFC) expected approximately 10.2 million tonnes of canola will be crushed during 2019/20. That would be up by about 500,000 tonnes on the year.

Meanwhile, the soybean crush volumes were significantly lower when compared year to year.

The Canadian soybean crush in November came in at 156,626 tonnes, about 7,900 tonnes more than in October. However, crush volumes at 573,953 tonnes so far this marketing year are down 17.6 per cent when compared to this same time in 2018/19.

To date, 105,883 tonnes of soyoil has been produced, which is 18.9 per cent lower than at this point last year. Soymeal was down as well, at 443,200 tonnes for a drop of 17.5 per cent from 2018/19.

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The canola crush in the latest weekly reporting period came in at 204,820 tonnes, only slightly off the record of 208,268 tonnes hit in March.

A total of 1.48 million tonnes of canola have been crushed during the 2017-18 crop year to date, which compares with 1.56 million at the same point a year ago.

The active crush pace comes despite margins that are well off their year-ago levels.

Processor margins were estimated at about $67 per tonne above the nearby futures on Thursday, which would be about $40 below the levels seen at the same point a year ago, according to ICE Futures Canada data.

— Phil Franz-Warkentin writes for Commodity News Service Canada, a Glacier FarmMedia company specializing in grain and commodity market reporting.

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The canola crush during the week ended Wednesday came in at 200,294 tonnes, according to the most recent Canadian Oilseed Processors Association report.

That puts the crush capacity utilization for the week at 93.7 per cent, and the year-to-date level at 89.4 per cent.

A total of 3.99 million tonnes of canola have been crushed to date, up from 3.48 million at the same point a year ago.

While crush margins have softened slightly over the past month, they are still well above the year-ago levels.

Processor margins were estimated Thursday at $116 per tonne above the nearby futures, compared to just $73 at the same point a year ago, according to ICE Futures Canada data.

— Phil Franz-Warkentin writes for Commodity News Service Canada, a Winnipeg company specializing in grain and commodity market reporting.

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Canada exported 293,300 tonnes of canola during the week ended Sunday, according to the latest Canadian Grain Commission data.

That compares with only 149,800 tonnes the previous week and the prior five-week average of 226,500 tonnes.

During the crop year to date, Canada has exported 3.494 million tonnes of canola, which is slightly off the 3.595 million tonnes exported during the same period a year ago.

Part of the slower export pace is likely tied to the larger demand from the domestic crush sector. Canadian canola crushers have processed 3.467 million tonnes of canola to date, about 500,000 tonnes ahead of the year-ago pace.

— Phil Franz-Warkentin writes for Commodity News Service Canada, a Winnipeg company specializing in grain and commodity market reporting.

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Frost and dry conditions on the Canadian Prairies have damaged the crop, which processors, including Bunge and Richardson International, crush for vegetable oil.

As of Monday, crushers’ profit margin was $47.87 per tonne, according to ICE Futures Canada, based on the nearby futures price, which hit its highest level since September 2013. That margin was up slightly from a week earlier, but was still 66 per cent lower than a year ago.

The margin, which measures industry returns, factors in futures prices of canola seed, as well as soybean oil and soymeal, which are similar to processed canola products.

Weaker Chicago soyoil prices, trading about 18 per cent lower than a year ago, have also weakened canola margins for crushers.

Due to weak margins, crushers will slow production more than usual during summer maintenance and likely delay canola oil and meal sales, said Chris Vervaet, executive director of the Canadian Oilseed Processors Association (COPA), whose members include Archer Daniels Midland and Louis Dreyfus.

The 2014-15 canola crush volume of 6.5 million tonnes as of June 24 actually exceeds the pace of a year earlier, according to COPA. The higher volume reflects processing levels when margins were more attractive, said Don Roberts, canola analyst at Ag Commodity Research.

Calgary-based Sunora Foods has contracts to buy canola oil from crushers through August, and in some cases through 2015, said CEO Steve Bank. The company sells canola oil to distributors, groceries and restaurants.

Crushers are already seeking price increases for new sales, he said.

“If the price goes up, we’ll sell at a higher price level,” Bank said. Those higher prices would work their way all the way to the consumer, he said.

Most canola oil buyers would not accept a vegetable oil substitute made from soybean or corn, which Sunora also sells, Bank said.

Angelo Karaiskos, president of Montreal-based Titan Oils, said crushers are already unwilling to commit to canola oil sales for the fourth quarter or 2016.

Leftover canola supplies from the current crop year are likely to be minimal, Roberts said, putting more importance on the new harvest.

— Rod Nickel is a Reuters correspondent covering the agriculture and mining sectors from Winnipeg.

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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 Tuesday, the Canola Board Crush Margin calculated by ICE Futures Canada was at about $101 above the most active March contract.

Current levels are right in line with the $20 range of recent weeks that has seen margins generally hover within $10 either side of $100.

At this time a year ago the margins worked out to 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,” he said, adding “if they weren’t doing OK they wouldn’t be doing 130,000-140,000 tonnes a week and they wouldn’t be building new crushing plants or expanding old ones.”

If average basis levels are widened out because the futures price is too high for the export market, he added, it will add to the profits for the crushers.

Crushers are able to move seed through their systems much faster than the line companies moving canola to Vancouver for export, which leads to reduced carrying charges.

— Phil Franz-Warkentin writes for Commodity News Service Canada, a Winnipeg company specializing in grain and commodity market reporting.

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