(Resource News International) — Canola bids in Western Canada saw some improvement over the past week, although basis levels are still not as firm as they were before the news broke in October that China would require shipments to be blackleg-free after Nov. 15.
FarmLink Marketing Solutions analyst Darren Frank of Oakville, Man. said the China situation, along with the lingering uncertainty of this year’s harvest, should keep basis levels from seeing much more improvement for now.
Prices in the country have improved a little bit, he said, “but we’re still not back at the levels we were at before the Chinese debacle.”
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There were basis opportunities in the mid- to low 20s for nearby delivery in Manitoba, he said, although levels were wider in the deferred months because of the uncertainty. He noted basis opportunities in the single digits could be found a month ago for March/May delivery in Manitoba.
Producers are finally making some movement on the last of this year’s canola crop. “The question now is: How big will the crop be? What will get harvested and what will we leave out? And for what we do leave out, how will we handle it in the spring?” he said.
He thought buyers would keep basis levels on the wide side to protect themselves against bringing in the damp crop being harvested now that will need to be dried.
The trade was well covered for the business that’s on the books, he said, noting that it will take new buying interest to come forward to move the basis. As a result, Frank didn’t expect to see much strengthening in the basis until the market finds out how the Chinese situation will turn out.
Soft domestic crush demand should also put some pressure on cash bids, Frank said, noting that salmonella concerns have kept a number of plants from shipping soymeal to the U.S.
However, he said, a number of new plants will soon be online, which could lead to increased demand from the crush sector.
Louis Dreyfus Canada operates inland terminals across the Prairies and prices on its website show spot basis levels as high as $5 per tonne under the January futures in southern Alberta.
Moving eastward, the company’s widest basis levels are found in southern Manitoba, where its terminals are currently offering basis levels around $29 per tonne under the futures.
Looking to the spring, Dreyfus has basis levels in the $8-$11 per tonne range under the March futures in southern Alberta, and $26 per tonne under the futures in Manitoba.
