Crush Continues to Hit Monthly Records
April crush data were released this week. At 845,459 tonnes, crush was a record for the month but down from the March total. Compared with last year, April crush was up 5 percent (36,500 tonnes).
It is not unusual to have a monthly decline from March to April given fewer days in the month. In five of the previous six crop years, monthly declines were recorded over that period with last year being the exception.
Daily crush rates came in near 28,200 tonnes per day in April versus 28,400 tonnes in March and 27,000 tonnes for April in 2019. Daily crush rates have been near the 28,000-tonne mark for several months this crop year. The daily crush rate does not suggest a significant slowdown occurred for April.
What about the rest of the crop year?
As has been written about before, the margin calculation is not a good indicator for changes to crush totals for the industry as a whole. Instead, FBN examines historical crush changes month to month. Previously, FBN discussed percentage changes and ran through scenarios based on any monthly changes rather than looking at history for each month. The latter is what was examined this week.
Using monthly summary statistics, what could happen for May to July crush?
FBN took minimum, maximum and the average percent month-over-month changes and applied that to the April crush total. For example, in the minimum scenario column, the May percent is the smallest percent change (or largest percent drop) recorded from April crush to May crush, based on Statistics Canada data. The volume is that percentage applied to the April total at 845,459 tonnes. The table simply puts into context what could happen based on historical monthly changes. The takeaway is that using the smallest percent changes (minimum values), the crush total for the crop year comes in at 9.8 million tonnes.
Balance sheet implications
FBN currently is forecasting crush to total 10.25 million tonnes for the 2019/20 crop year. That would fall near the average scenario discussed above. Crop year to date, crush is up 10 percent. Applying that to the remainder of the crop year results in a crush volume at 10.25 million tonnes. Crush remains a bright spot in the balance sheet and is expected to be a key driver in moving stocks lower.
What this means for the Canadian farmer
The point of all of this is to educate the reader that the canola balance sheet is not all negative. Crush is strong and without an unprecedented event, crush will remain at near-record paces for the remainder of the crop year. Statistics Canada could add to the canola crop in its July report, which would align with history. The market likely is already pricing this in.
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