Canada Markets

Weak Board Crush Margin Weighs on Canola

Cliff Jamieson
By  Cliff Jamieson , Canadian Grains Analyst
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The line on this chart approximates the move in the Canadian Canola Board Margin Index, based on movements in the spot Canadian dollar. This shows a low of $5.93/mt reached on Aug. 9 (November canola, October oil and meal), down sharply from a July 30 high of $73.92/mt, with a modest recovery achieved on Aug. 10. (DTN ProphetX chart)

A ProphetX calculation that approximates the move in the Canadian Canola Board Margin Index, using the spot Canadian dollar, November canola along with October soybean oil and meal closes, shows a dip to $5.93/metric ton on Aug. 9. This is a bearish factor for the market, when one considers that this index has fallen from the $73.92/mt reported on July 30, or just over one week. As recently as June 10, this index was calculated at a high of $188.80/mt.

This contributed to a mixed outlook for the canola market on Tuesday, with the nearby November closing $3.90/mt lower to lead the January and March contracts lower, while the May and July contracts settled $0.90/mt and $1/mt higher, respectively.

A combination of the move lower in November canola and higher close in soybean oil on Aug. 10 outweighed the losses from the slightly lower close in October soymeal and today's Canadian dollar strength, with the index showing a gain of approximately of $7.45/mt to $13.38/mt.

Canadian Grain Commission data for week 52 shows no slowing in the domestic crush, grain likely purchased and hedged long ago. In week 52, or the week ending July 31, the CGC reported domestic disappearance at 192,700 mt, a slightly higher volume that seen in the previous week while the highest volume reported in four weeks. The weekly average disappearance over the final eight weeks of the crop year was close to 190,000 mt, which compares to the average exports over this period of close to 116,000 mt.

While there is uncertainty surrounding the stocks carried out of the 2020-21 crop year or as of July 31, we will be watching for curtailed activity in the few short weeks prior to new-crop availability.

Cliff Jamieson can be reached at

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