(Resource News International) — Canadian canola crush margins have declined sharply over the past week, as a rally in canola futures made it more expensive for domestic processors to acquire the seed. Strength in the Canadian dollar also served to cut into crush margins.
The canola crush board margin, as quoted by ICE Futures Canada, was sitting at $83.55 above the nearby July futures as of June 14, down by nearly $20 from the previous week.
During that timeframe the July canola contract rose by nearly $30 per ton, while the Canadian dollar strengthened by about three cents relative to the U.S. currency.
The negative impact on crush margins from the futures and the currency was tempered by the firmness in the product values during the week.
The downturn in crush margins has caused domestic processors to back away slightly from the canola market, according to a trader.
However, he added, with the increasing crush capacity in Western Canada, the demand is still there, but processors are just being more patient making purchases in the current climate.
Canada has crushed 3.82 million tonnes of canola during the current crop year, as of June 9, which compares with 3.46 million tonnes at the same time a year ago, according to the latest Canadian Oilseed Producers Association data.