Canada Markets

Western Canada's record crop and disappointing rail movement over winter is expected to weigh on markets for some time to come. This is particularly clear given the trend in the CWRS basis level into new crop, as indicated by the blue line with markers for the selected months of June, August, October and January.

The average cash basis, based on accessible internet quotes, is $66.51 per metric tonne under the July contract, or $1.81 per bushel. Based on Friday's close, this represents a cash price of $5.28/bu. Basis levels show little improvement in the fall, with the August basis at $66.14/mt under the August, while October delivery is $67.24/mt under the December, which results in a cash bid of $5.44/bu. Not until January do we see a narrowing in the basis, with bids averaging $61.36/mt or $1.67/bu. under the March contract.

The red bars represent the monthly basis levels calculated for the June through January 2015 period. Canola basis has narrowed to reach levels not seen since September 2013. Nearby basis was calculated at $30.67/mt under the July contract, with companies split between pricing against the July and the November contracts; this results in an average Prairie-wide cash bid of $432.33/mt, or $9.80/bu.

The new-crop November basis is calculated at $40.76/mt under the November for November delivery. This results in an average November delivery price of $421.34/bu. or $9.56/bu. based on Friday's close. Since the end of May, this basis has narrowed roughly $10/mt indicating the possibility of growing concern over late seeding on the Prairies, the chance of lost acres due to excessive rains, as well as recent frost over areas of the Prairies.

DTN's 360 Blog

This week's question asks whether seeding delays in certain areas of the Prairies will lead to changes to cropping choices. You can weigh in with your thoughts on your DTN Home Page and your responses are always appreciated.

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

Follow Cliff Jamieson on Twitter @CliffJamieson

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