While the canola futures price rallied into the fall months off of their summer lows, basis levels in the Par region weakened into the fall. The average basis for the Par region was reported at below $45.00 per tonne under the nearby WCE futures price, well below the levels seen at the same time during the previous two crop years. Factors influencing the weak basis at the country elevator include strong farmer deliveries for the crop year to date, with the Canadian Grain Commission reporting farmer deliveries for the week ending December 21, 2003 at 3.09 million metric tonnes as opposed to only 2.06 million metric tonnes for the same period the previous year, combined with what trade sources describe as relatively soft export demand. Recent weeks have shown the basis level to improve to similar levels seen in the fall of 2000, the last year that canola production could be described as being at more 'normal' levels.
The combination of relatively large canola supplies and a strong Canadian dollar has caused WCE canola futures prices to trade at their lowest levels relative to CBOT soybean futures in several years. While canola futures in recent years have typically commanded a premium over soybean futures of between $20.00 per tonne to $120.00 per tonne, WCE canola has generally been trading at a discount to CBOT soybeans in the latter part of 2003.
