Canada Markets

Vancouver Cash Canola Strengthening

Cliff Jamieson
By  Cliff Jamieson , Canadian Grains Analyst
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This chart shows the Vancouver cash basis reported by ICE Canada over the past year against each consecutive contract. This basis has been unchanged since late September, but is reported $5/mt stronger in the past few days to $25 over the March. (DTN graphic by Nick Scalise)

Since late September, the Vancouver cash canola basis has been reported by ICE Canada at $20/metric ton over the November, then over the January, then over the March contract. That is, until this week. This basis was reported at $22/mt over on Monday, $25/mt over on Wednesday.

This is also happening at a time when futures are showing signs of strength, with the March contract having lost a modest $1/metric ton on Wednesday, its first daily loss in eight days. This move is despite weakness seen in soybeans, along with strength in the Canadian dollar against its U.S. counterpart.

Cash basis in the country has changed little. The average prairie cash basis based on accessible internet bids is calculated at $30.73/mt under the March, $.60/mt narrower or stronger than earlier in the week although has remained relatively unchanged for the past three weeks.

Given that most recent AAFC estimates are very much a carbon copy of the 2015/16 crop year, the trend in basis seen in 2016 may be of interest. This time last year, Vancouver cash traded at the same level as seen currently. Vancouver cash was reported at $25/mt over until March 1 when it began to strengthen. By the end of March, Vancouver trade was reported at $33/mt over, where it remained for a few days only to weaken gradually into the summer months.

This time last year, the average cash basis on the Prairies was calculated at $26.22/mt under the March, $4.51/mt stronger than Wednesday's spot cash basis. Cash basis reached its narrowest or strongest point on April 19 at $13.04/mt under the May.

It's difficult to know what's behind this week's move or whether it will last. Paris rapeseed reached fresh contract highs on both the February and May contracts on Wednesday, although finished lower by the end of the session. The next important signal may come from the Feb. 3 Statistics Canada stocks of principal field crops report.

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

Follow Cliff Jamieson on Twitter @CliffJamieson

(ES)

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