Old crop canola

[crusher]

I got my $649 futures target. I'm happy.
Thought I sold it all but found three more loads.
Good problem at these levels.

[jdepape]

The way I calculate it, where basis levels were
last week was at or near "futures delivery
equivalent", at least for exporters. That means
that an exporter can take delivery of futures and
regardless of where in the prairies he gets it, it
won't cost more than what he's paying for cash
canola at his elevator. At this point, it doesn't
make sense - from a trading perspective - to
increase your basis when you can just stand for
delivery at roughly the same value to you.

For crushers, the calculations are a bit different.
For instance, if Bunge in Altona takes delivery of
futures, they may get it in the Peace. Then they
have the cost to ship the canola to Altona.
Richardson in Lethbridge might get it in Morris MB
- or Nicklen Siding in N Sask. Each one is
different and each one will price accordingly.

Errol is right - the futures were taking all the heavy
lifting. That's because there was no reason for
basis to increase much anymore. No trader worth
their salt would ever bid higher for cash than the
equivalent value by taking delivery.

Will basis rebound? Perhaps, but there is a limit.
And I think we were there last week.