Canada Markets

Statistics Canada reported 797,438 metric tons of canola crushed in February, down 12.9% from the previous month, the lowest monthly crush in five months and the second-lowest monthly crush this crop year. This follows four record monthly volumes reported above 900,000 mt per month. This was not unexpected, with potential pressures to ration supplies, a brutally cold period across the Prairies during the month while the attached chart shows a normal pull-back in activity during February, seen on 2019-20 data (brown bar) as well as the three-year average.

The February volume crushed was below the 812,633 mt crushed in February 2020 but well-above the three-year average of 798,034 mt.

Year-to-date, 6.083 million metric tons has been crushed, up 3.5% from the same period last crop year, while 2.3% higher than the cumulative pace needed to reach the current AAFC forecast of 10.2 mmt in 2020-21. The steady pace is shown by the green horizontal line on the attached chart, or 850,000 mt/month.

Monthly data shows 346,410 mt of oil produced during the month, which represents 43.4% of the seed crushed, which is only marginally higher than the cumulative percentage of oil produced during the first seven months of the crop year. Year-to-date, the oil produced is 0.4 percentage points lower than achieved during the 2019-20 crop year.

The incentive to crush remains high. The March 23 Canadian Canola Board Margin Index, an indication of the returns generated crushing canola based on movements of the soybean oil and soymeal futures, rose by $25.07/mt with a favourable combination of price moves -- a higher soybean oil and soymeal close, a lower close for May canola and a 39-point drop in the Canadian dollar. This is well-above the $60.67/mt reported one week ago, the $28.10/mt reported one month ago and is closing in on the $105.98/mt reported one year ago. It is also interesting to note that new-crop crush indices are reported as high as $147.94/mt, which is perhaps another incentive to slow old-crop activity.

This month's report also included 125,966 mt of soybeans crushed, down 11.2% from the previous month, down 12.7% from February 2020 and the smallest monthly soybean crush in seven months. So far this crop year (Sept-Aug), 869,066 mt has been crushed, down 2.5% from the same period in 2019-20 and 11.2% below the three-year average. The current pace of crush is behind the steady pace needed to reach the current 1.9 mmt AAFC crush forecast for 2020-21.

Cliff Jamieson can be reached at cliff.jamieson@dtn.com

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