The average November delivery canola basis, based on accessible internet bids, has narrowed this month although buyers continue to exercise caution in their pricing despite some suggestions that Prairies production could be in the neighborhood of 12.5 million metric tons this season, 3 mmt lower than 2014 production.
New-crop basis levels remained flat for a number of months this spring, with November delivery priced at $20.21/mt under on April 1, $20.27/mt under on May 1, $20.50 under on June 1 and $20.13 under at the beginning of July. Since early July, the November delivery basis has narrowed to today's $18.26/mt under the July, given the uncertainty surrounding 2015 production.
Despite the concerns surrounding this year's production, producers continue to push product into the system. Week 49 deliveries into licensed facilities for the week ending July 12 totaled 318,300 metric tons, the seventh consecutive week that deliveries have held above 300,000 mt, with the previous four-week average at 340,825 mt. Over the past three years, week 49 deliveries have averaged 245,467 mt.
As a result, commercial visible stocks leave the industry in a comfortable position. Total commercial stocks were reported at 1.2596 mmt, 57% above the 803,500 mt reported for the same week in 2014 and close to 100% above the three-year average.
With total weekly demand averaging approximately 319,000 mt over the past four weeks, calculated by adding weekly CGC licensed export data along with weekly COPA crush data, commercial inventories cover almost four weeks of demand while in-transit data shows an additional 208,600 mt on western rail and a further 20,500 mt in-transit on the Great Lakes.
With new-crop coming in weeks to come, grain companies can perhaps afford to be patient.
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