Canada Markets

The most recent Canadian Oilseed Processors Association data shows 178,712 metric tons crushed in the week ending Dec. 27, with disappearance down sharply from the previous week given a combination of the holiday season and the bitter cold weather across the Prairies. This is down 11.4% from the 201,677 mt crushed in the previous week, which was the second highest weekly crush realized this crop year, or since Aug. 1.

As seen on the attached chart, the 2017/18 cumulative crush, indicated by the black line, is tracking closely with last year's pace, which is shown by the green shaded area, both measured against the volume scale on the primary vertical axis. A total of 3.767 million metric tons has been crushed, which is only 26,168 mt or .7% behind the pace realized last crop year, as measured against the primary vertical axis. The cumulative crush is roughly 66,000 mt higher than the steady pace needed to reach the current 9.1 mmt crush target.

The blue and brown lines on the chart represent the cumulative crush capacity utilization, as measured against the percent scale on the secondary vertical axis. Current crop year activity continues to lag last year's capacity utilization, with the most recent week showing a cumulative estimate of 85.7% as compared to last year's 88.9%. Perhaps this should be no surprise given that an approximation for the Canadian Canola Board Margin Index, a proxy for returns generated crushing canola, is calculated at $76.16/mt, which is down roughly $41.56/mt or 35% from the $117.62/mt calculated for the last day of December in 2016.

Just the same, prairie crushers are the most aggressive when it comes to pricing. A single-digit basis level is seen for the first time for February delivery at one crusher, which leads to a zero basis or option price for delivery in March, April and May delivery.

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

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