Canada Markets

Canada's canola crush for the week ending April 29 showed a sharp drop in volume of 15.9% from the previous week, although it is early to tell if this will be an ongoing reaction to softening crush margins. A total of 126,917 metric tons were crushed during the week, down from 150,938 mt the previous week with the 10-week average at 144,937 mt. A record crush of 162,166 mt was achieved during the week ending March 25.

Crush margins have been under pressure given the strength of the Canadian dollar over the six-week period from mid-March to late April. Friday's Canadian Canola Board Margin Index, an indication of canola crush returns, was reported at $80.96/mt over the July future, which compares to $90.96/mt over a month ago and $188.07/mt over reported for one-year ago.

It's difficult to say how the industry will respond, although cumulative volumes crushed remain on pace to reach the 7.2 mmt crush target set by Agriculture and Agri-Food Canada, which is approximately 3.2% higher than the 2013/14 crop year. Cumulative crush as of the week ending April 29 is reported at 5.393 mmt, which is 5% above year-ago volumes. Year-to-date crush remains just 7,251 mt below the steady pace needed to achieve the annual target. This is noted on the attached chart, with the actual cumulative crush (red line) closely tracking the steady pace needed to reach the 7.2 mmt target (black line).

Year-to-date exports (not shown) were reported at 6.284 mmt (licensed facilities only) as of week 38 or the week ending April 26, 4.9% above year-ago volumes. While the 9.2 mmt export target seemed like a stretch over most of this crop year, current levels remain roughly 439,000 mt behind the cumulative pace required to achieve this target. As of the end of February, the CGC reported an additional 186,771 of unlicensed exports to the U.S. which will further narrow the gap and help make current targets achievable.

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

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(ES)

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