Canola Basis Strengthens
Canola futures have struggled with the $900/mt level in November and the $880/mt level in December and are seen consolidating between $830 and $850/mt in recent trade, while basis is seen strengthening as buyers sharpen their pencils in order to attract deliveries.
On Jan. 16, when the March contract closed $0.90/metric ton higher, cash bids rose by $1.77/mt in eastern Manitoba to $3.32/mt in both the southern Alberta and southwest Saskatchewan regions, according to pdqinfo.ca cash price reports. This signals a strengthening basis, at a time when the March/May spread remains in inverted territory, also signaling front-end demand.
Since Jan.1, basis has strengthened from $1.95/mt to $6.91/mt across the nine regions reported by pdqinfo.ca, with Jan. 16 posted cash bids ranging from $815.69/mt ($18.50) in western Manitoba to $839.12/mt in southern Alberta ($19.03/bushel), while crusher bids are higher yet.
This strength is seen despite media reports in late December suggesting that Australia's exports would be problematic for Canadian exporters during the balance of the crop year. This is clearly the case with exports to Europe, with this week's European Union data showing Australia supplying 32.4% of EU imports as of Jan. 15, the largest supplier next to Ukraine, while imports from Canada are shown at a modest 5% of imports.
At the same time, Canadian Grain Commission statistics shows canola exports to China as of November up 119% from last year at 1.373 mmt and 37.9% higher than the five-year average, which bears watching.
Tuesday's ICE Canola reports show the track Vancouver canola basis strengthen $2/mt to $58/mt over the March contract.
Cliff Jamieson can be reached at email@example.com
Follow him on Twitter @Cliff Jamieson
(c) Copyright 2023 DTN, LLC. All rights reserved.
To comment, please Log In or Join our Community .