Winnipeg Commodity Exchange Canola Futures Prices Continue Downward Trend

Canola futures prices at the Winnipeg Commodity Exchange continued their downward trend during the month of Janu-ary.The March 2005 contract closed the month at $252.20 per metric tonne,down $20.40 from December 31.The nearby contract has not traded this low since November 2000.Slow demand and the large supply of canola in Western Canada and large supplies of canola/ rapeseed and other oil crops worldwide have continued to be a bearish influence.On February 2nd,Statistics Canada reported Canadian canola stocks at December 31,2004 were 5.396 million tonnes,the highest since December 31,2000 (5.385 million tonnes)and nearly 35%above the December 31,2003 stocks of 4.001 million tonnes.Both exports and domestic crushing continue to lag behind last year ’s levels,despite a larger crop.

Basis has continued to narrow across the prairies.The average basis in the par region around Saskatoon was about $20 under the March futures at the beginning of Jan-uary,but on January 31st the average basis had narrowed to about $10 under March and the best basis was about $0.The average basis of $10 under March is about $11 above the 5-year average and $19 above the average basis at the same time last year.The basis has been supported by the reluctance of producers to deliver canola.Crop year-to-date producer deliveries are lower than at the same time last year.

Although still far below the record highs of the spring of 2004,canola crush margins have increased during the past month. The canola board crush margin ended the month of January at $53.60 per tonne, up $41.30 from the recent low of $12.30 on November 8th .