Canola seems range bound the market believes all is ok!

[charliep]

COPA numbers are not adjusted for currency. Did the calculations including currency adjustment and came up with a theoretical margin of about $60/tonne. Have to highlight the crush margin is theoretical in that based on futures. Actual cash margins - canola price actually paid versus at the plant meal and oil prices - will be different. I also note that crushers are very sophisticated in how they manage risk.

[farmaholic]

Once again thanks Charlie

[charliep]

Rareearth

You asked if there is a source for the canola oil versus soyoil spread. Other analysts may have other sources but I don't know of vegetable oil prices that are directly comparable to canola. I look at Toronto canola oil prices from a source and I think I have seen a Vancouver based export price over time.

The other comment that there is actually no one price for canola. In fact to make more complicated (something economists love to do), you have to break into two specific markets - crude canola oil (exported off shore for the most part) and refined (main way canola is moved to the US). You also have to look at various customers with US likely to pay premiums (when they have to) and others like China a lot quicker to switch to another vegetable oil alternative if prices get out of line.

You also have to include the meal component. Yes canola meal has advantages in some rations such as dairy because of protein properties in rations but still have a lot of product to deal with in soybean meal market that will be very competitive over the next couple of years.

[charliep]

Below are this week's COPA numbers. I highlight the percent capacity. 75 % last week versus over 80 % to date. Things are starting to slow as end of year inventories tighten up.

[URL="http://copaonline.net/documents/COPAWEEKLYMay202015.pdf"]COPA[/URL]

[bucket]

They might have to slow more because this is going to be a good lentil year and that doesn't bode well for canola production.

Disclaimer. I have no lentils or canola in. So sad for me.

[Rareearth]

Hi Charlie
I don't think it came across correctly in my above question, I dislike the way auto correct helps me.

To help understand the "commodity " oil market or what ever is cheapest vs canola vs premium canola there must be a historical chart where you can compare the spread between :
soy oil vs canola historic vs Palm 10 years
Once we see this chart, or the maximum premium canola to say soy ( which is the drag right now due to supply) it might be worth placing hedges?

Also one might expect really good basis levels from the exporters and crushers?

In a situation canola vs soy would there be increased usage of the canola futures or less( keeping their positions - in house) ?