Canada Markets

The Canadian Canola Board Margin Index -- What has Happened?

Cliff Jamieson
By  Cliff Jamieson , Canadian Grains Analyst
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The bars of this chart compares the month-over-month and year-over-year change in the components of the Canadian Canola Board Margin Index along with the change in canola, all measured in dollars/metric ton CAD. (DTN graphic by Cliff Jamieson)

The nearby Canadian Canola Board Margin Index, a proxy for the returns generated crushing canola, calculated using November canola futures along with October soybean oil and soymeal futures, turned negative on Aug. 23 and has since continued to weaken.

The Aug. 31 calculation results in a negative index of minus $25.35/metric ton, down $2.88/mt from the previous day. The index has deteriorated rapidly, with the calculation for the last day of August down $97.97/mt from July 30, while down $102.12/mt from the index reported one year ago, or Aug. 31, 2020.

The attached chart shows the month-over-month change and year-over-year change in the three components that make up the index, measured in Canadian dollars per metric ton. The formula is generated based on an oil/meal ratio of 40%/60%, while converted to Canadian dollars using the noon rate. The meal contribution is multiplied by 0.75 to account for a lower protein in canola meal as compared to soymeal.

The bars on the attached chart represent the month-over-month and year-over-year values calculated for the components of the index, based on the movement of October soybean oil, October soymeal and November canola. Rather than the noon rate used by the index, calculations are made using the spot Canadian dollar and values will vary slightly.

During the past month, the oil component has fallen by $44.56/mt and the soymeal component has fallen by $2.29/mt, both measured in Canadian currency. The spot Canadian dollar weakened 81 basis points over the month, tempering the losses in the two components. At the same time, the November canola contract gained $53.10/mt as fears of a smaller crop grow. The diverging move in futures led to the loss realized in the index.

The last three bars represent the year-over-year change in the index components. Rather than a divergence between canola and soybean's products, all three rose in price, with the November canola price rising faster than the value of meal and oil. In Canadian dollar terms, the meal component rose by $16.24/mt CAD and the oil component rose $278.70/mt, while the combined increase in values fell short of the $397.10/mt rise in the November canola future from one year to the next. During the course of the year, the spot Canadian dollar gained 256 basis points against the USD, weighing on the product values when converted to Canadian currency.

A ProphetX chart approximating the move of this index points to further weakness to minus $31.20/mt on Sept. 1.

Cliff Jamieson can be reached at

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