Since mid-March, Vancouver cash canola has strengthened $8/metric ton, or 27%, to $38/mt over the May contract, with a move from $35/mt to $38/mt seen in recent days. This move is in conjunction with canola's period of seasonal strength, which points to the nearby futures contract reaching a seasonal high in late-May or early-June. It is also interesting to note that recent strength has taken place during a period of Canadian dollar strength, while futures also remain well supported.
The attached chart provides a hint of when West Coast export activity begins to slow and basis weakens. In 2016/17, this basis peaked at $47/mt over in mid- to late-June, as indicated by the blue line on the chart, and quickly deteriorated. This was the latest of the four years shown, with 2013/14 and 2015/16 peaking in March, while 2014/15 saw its strongest West Coast cash basis of $50/mt, which was reached in October. The four-year average shows a high of $44.75/mt reached in late March, as indicated by the green line on the chart.
Over the past four years, an average of 60.2% of total crop year exports were realized as of week 34. Given the cumulative 6.804 million metric tons of licensed exports reported as of week 34 by the Canadian Grain Commission, or the week ending March 25, this historical pace would project to crop year exports of 11.3 mmt, slightly below the current AAFC forecast of 11.5 mmt.
At the same time, the 2015/16 and 2016/17 pace was very similar as of week 34, with 62.7% of crop year shipments achieved by week 34 in 2015/16 and 63.7% of total shipments achieved by week 34 in 2016/17. The 2016/17 pace of movement would project to crop year exports of 10.7 mmt for the current crop year, well-below current government forecasts.
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