Canadian Oilseed Processors Association's most recent crush data indicates a total of 3.994 million metric tons of canola crushed as of Jan. 4, a record pace and 14.7% higher than the same week one year ago. A sure sign of the solid demand seen in the crushing industry is that the most recent week's crush volume was 200,294 metric tons, the second-largest weekly crush reported this crop year. The week prior, 195,920 mt was crushed which was the fourth largest, both achieved over the holiday period. The most recent week saw the cumulative crush close to 160,000 mt ahead of the pace needed to reach AAFC's current 8.9 mmt crush target which will push the 2016/17 crush above the 9 mmt level.
A look at the most recent Statistics Canada export data to the end of November shows solid gains in both oil and meal exports. The first four months of the crop year shows canola oil exports up 15% from the same period last year at 990,161 mt. The share of this volume moved to China is calculated at 24.9%, up from the 23.1% of the total volume shipped to this country in the first four months of the 2015/16 crop year. At the same time, the share of total exports shipped to the United States has dipped from 65.1% to 64.5%.
The volume of meal exported in the first four months of 2016/17 is reported at 1.526 mmt, up 24.5% from the same period last year. In 2015/16, no meal was shipped to China in the August-through-January period, although they have been a consistent buyer since. In the first four months of this crop year, China was shipped 18.2% of the total export volume, at the expense of volumes destined for the U.S. The August through November period saw 1.204 mmt or 78.9% of the total exports shipped to the U.S., which is a higher volume than shipped in the same period in 2015/16 although a smaller share of total exports than the 94.9% of total exports realized in the same period of 2015/16.
The attached chart shows an indication of the trend in Canadian canola crush margins, based on the calculation developed by COPA which deducts the price of seed as indicated by the nearby futures value from the weighted contributions from both oil and meal, calculated utilizing soybean oil and soymeal futures. This calculation could vary from COPA's Canadian Canola Board Margin Index calculation, given the choice of continuous active contracts, as well as the use of the spot Canadian dollar as opposed to the Bank of Canada noon rate utilized in the COPA formula.
As seen on the attached weekly chart, the calculated margin is challenging the highest levels reached since June 2014. Resistance on the spread chart is seen at $136.07/mt, the 50% retracement of the move from the February 2014 high to the November 2015 low.
Also of interest is the year-over-year improvement in this calculated indicator. While 2015/16 saw a record crush achieved, this chart points to Wednesday's close as being 67% higher than the year-ago value, suggesting that the current pace of demand will continue.
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Cliff Jamieson can be reached at email@example.com
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