Market Morsel: Can you dig it?
The canola price in Australia at present is very attractive. All port zones are trading at what are historically high harvest values. Is it really that good though?
The first two charts below display our basis for ICE and MATIF futures. The basis is our premium/discount to physical pricing.
As we can see, they have fallen to extremely low levels. Typically we would be trading at a slight discount to MATIF (French) but a premium to ICE (Canada).
The third chart below shows the long term spot basis levels for our canola. This gives an indication of just how discounted we have become.
We all know about the issues in Canada, which have drastically reduced their supply of canola. In Europe, there is also tight supply, causing their local price to rise.
Overall the price received by growers is attractive, but it is heavily discounted versus the rest of the world.
It will be interesting to see how this develops over the coming months.