The oil produced in the January crush represents 43.1% of the seed crushed, down from 44% the previous month. During the first six months of the crop year, this averages 43.4%, which compares to 43.7% during the first six months of 2019-20 and the three-year average of 43.9%.
The need to ration demand due to tight available supplies has been discussed for some time, although no slowing of activity was seen in January. It may result in a showdown between exporters and crushers as they chase the last of the uncommitted supplies on the Prairies.
The nearby Canadian Canola Board Margin Index faced a roller-coaster move in January. Early in this month, this index was reported above $130/mt, was reported at $74.31/mt by mid-month, back to $104.11/mt by Jan. 20, down to $60.41/mt by Jan. 26 and increasing to $84.49 by the end of the month.
This same index reported for February may lead to the desired slowing in activity needed to ration demand. The index has trended lower since Feb. 8, while the nearby index based on the nearby March contract moved into a negative position of minus $3.21/mt as of Feb. 22. On the same day, the index was reported at $36.60/mt against the May contract and $59.10 against the July contract, before moving above $120/mt and even $130/mt in new-crop positions. Some difficult decisions may lie ahead.
Cliff Jamieson can be reached at email@example.com
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