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Greg Colman, an equity analyst with Wellington West Capital Markets Inc. has produced a report which shows how the Canadian supply of canola is dropping at the same time that Canadian crushing capacity is increasing. Due to lower planted acreage and a lower yield this year, the expected supply of canola is pegged at 10.3 million tonnes, down from 12.6 last year. Meanwhile, the Wellington report is forecasting that the current domestic crush capacity of 4.3 million tonnes per year will grow to 7.1 million tonnes by the middle of 2010. The new Louis Dreyfus and James Richardson plants in Yorkton will be coming on stream. Cargill has expanded and Viterra has added capacity. This will amount to a 65 per cent increase in crush capacity in just one year. Wellington is predicting a contraction in crush margins. In other words, canola crushers won’t be making as much money. This should serve to increase canola prices for producers. Another interesting point in the report is that the U.S. has been rejecting some shipments of Canadian canola meal claiming salmonella contamination. This could increase the amount of canola meal that needs to be sold domestically and could have implications in the feed market. I’m Kevin Hursh. For Canola prices visit www.dynagra.com
Kevin Hursh PAg CAC