The Good: Canola markets shrugged off lower soybean oil and European rapeseed values to close up 0.63 per cent to C$960.60 per tonne inn the January 2022 contract. Canola has developed a mind of its own this week and has been leading the oilseed complex rather than taking directions from other markets. Harvest difficulties in the U.S. Corn Belt did support soybean futures, which posted modest two to three cents per bushel gains in nearby contracts. Canola cash values have pushed above the C$22 per bushel level in most Prairie locations.
The Bad: Ethanol production in the U.S. nearly hit an all time record last week, as a total of 1.106 million barrels a day were produced in the week ending on October 22nd. The margins for ethanol producers are excellent as gasoline prices continue to increase. By the way, gasoline stocks in the U.S. last week dropped by 2 million barrels to reach the lowest levels since 2017. With the corn harvest at 66 per cent complete, there is plenty of raw material for ethanol production. Corn responded by moving up 13.75 cents per bushel in today’s session.
The Ugly: Soybean oil futures dropped 1.4 per cent today, which pushed the December contract down to 61.42 U.S. cents per pound. The drop in the soybean oil futures means that the board crush margin for canola moved even more negative during today’s trading session. ICE crush margins today lost over C$20 per tonne to close at C$ -111.11 per tonne. Don’t shed any tears for the canola processors this year! Canola oil is currently trading at approximately a 15 cent per pound premium to soybean oil, which would change the crush margin from a dramatic loss to a positive margin.