Winnipeg Commodity Exchange Focus On Canola

March canola futures ended the month at Cdn$258 per tonne, having traded in a relatively narrow range throughout January. Chicago Board of Trade (CBOT) Mar 01 soybean oil values (adjusted for currency) established lows not observed in about a decade in early January, but traded at higher values throughout the remainder of the month, providing some support to canola values. CBOT soybean meal values, however, experienced a significant decline throughout January, losing over Cdn$30 per tonne to end the month at about Cdn$273 per tonne.

March canola futures values were supported by strong export activity, ignoring the decline in protein values. As a result, the Mar 01 canola board crush values declined significantly.

At the start of the 2000/01 crop year the Mar 01 canola/flaxseed spread was about $40 per tonne, similar to the levels observed one year earlier. However, since then the spread has narrowed significantly, remaining well below the levels observed the previous two years.

The developments observed in the canola market over the past month highlight both the opportunities and risks associated with cross commodity market developments. The supply/demand situation driving the canola market relative to the soybean complex and/or flaxseed market are likely to continue to warrant close attention in the coming months.