Soybeans Above 10.50

[LWeber]

"canola crush margins will be close to $150/t, yes thats $3.40 per bushel net profit"



Which grain company taught you that board margins equate to net profit?

[boarderbloke]

L.Webber,
I sell most of my canola through Pioneer(Richardson now days), and from what my local service centre manager(chem retailer) tells me, is that the crush margins posted at ICE are the avg reported crush margins for the crushing industry. Some companies are higher some are lower. He tells me that Richardson's are usually lower than the avg. and the crush margins posted represents the profit(wholesale value of the oil) over all the expenses associated with purchasing and crushing canola.
Do you understand crush margins to be something different than that?

[boarderbloke]

sorry, LWeber.

[charliep]

Actually the crush margin is a formula based on canola and
soybean meal/oil futures. Actual margins based on cash
business will be different. Has nothing to due with the
profitability of crushing canola on any given although
crushers will use futures to manage risk/lock in profits when
they can't match canola purchases from farmers against
canola oil and meal sales.

Formula used is below. (from ICE website).

The Canola Board Crush Margin is comprised of an oil and
meal contribution and a seed cost. It is calculated by
subtracting the ICE Futures Canada canola futures price from
the sum of the weighted value of the per tonne Chicago Board
of Trade futures price for soybean oil and soybean meal. The
calculation is based on a 40% oil contribution and 60% meal
contribution per tonne of canola seed crushed. The margin
calculation is currency adjusted using the Bank of Canada
noon rate and is published in both Canadian and U.S. dollars.

The margin calculation is a measure of the trend in core
processing returns at approximate industry yields. Actual
canola crushing margins are affected by numerous factors
including individual processing plant yields, actual oil content
of the seed, and the pricing basis for oil, meal and seed.

Crush Margin Calculation

Canola Board Crush Margin (Can $/tonne) = (BO * 22.0462 *
Noon Rate * 0.40)
(SM * 1.1023 * Noon Rate * 0.60 * 0.75)
- ICE Futures Canada Canola seed futures
In the above calculation:
BO = CBOT soybean oil futures settlement price in US dollars
per hundredweight (or cents per pound), 22.0462 converts
soybean oil to US dollars per metric tonne, and 0.40 reflects a
40% oil contribution.
SM = CBOT soybean meal futures settlement price in US
dollars per short ton, 1.1023 converts soybean meal to US
dollars per metric tonne, 0.60 reflects a 60% meal
contribution, and 0.75 is a price adjustment factor to account
for canola meal containing approximately 75% of the protein
in soybean meal.

[LWeber]

Board margins as Charlie points out are not actual profit.

Board margins have increased to over $150 yesterday and I have GROSS margins at just over $93.00. Net profit - you would have to see actual statements to go there.

But $93.00 is insane though - there should NOT be a negative basis anywhere in western Canada at a crush plant - but there is.

Fran is blowing an aorta over a $50.00 descrepancy in U.S./Can wheat - yet it is ok for $93.00 canola margins. Pipeline gross revenue on CWB wheat is less than $25.00.

[boarderbloke]

thanks for the correct information, guys.

[pilpilsner]

I think the next three,four days are going to be crucial.

A pile of earnings are coming out in the next two weeks and that should give us market directions.If the broad market tanks hard we may be in trouble.