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The Canadian Canola Board Margin Index, an essential metric for the oilseed processing industry, is a proprietary formula developed by members of the Canadian Oilseed Processors Association (COPA) and published by ICE Futures Canada. This index offers insights into the core processing returns within the sector.
The Canola Board Crush Margin is fundamentally composed of contributions from both oil and meal, offset by the cost of the raw canola seed. Its calculation involves subtracting the ICE canola futures price from the combined weighted value of Chicago Board of Trade (CBOT) futures prices for soybean oil and soybean meal. The methodology assigns a 40% contribution to oil and a 60% contribution to meal for every metric tonne of canola seed processed. To account for international market dynamics, the margin calculation is adjusted for currency fluctuations using the Bank of Canada's noon rate and is disseminated in both Canadian and US dollars.
While the index provides a valuable trend measure for processing returns based on approximate industry yields, actual canola crushing margins can vary significantly. These variations stem from numerous factors, including the specific yields of individual processing plants, the actual oil content present in the raw seeds, and the distinct pricing bases applied to oil, meal, and seed commodities.
The specific components for calculating the Canola Board Crush Margin (expressed in Canadian dollars per tonne) are as follows: * **Oil Contribution**: The CBOT soybean oil futures settlement price (BO), quoted in US dollars per hundredweight (or cents per pound), is multiplied by 22.0462 to convert it to US dollars per metric tonne, and then by 0.40 to reflect its 40% contribution, further adjusted by the Bank of Canada noon rate. * **Meal Contribution**: The CBOT soybean meal futures settlement price (SM), quoted in US dollars per short ton, is multiplied by 1.1023 to convert it to US dollars per metric tonne, then by 0.60 for its 60% contribution, and finally by a price adjustment factor of 0.75. This 0.75 factor accounts for canola meal typically containing approximately 75% of the protein found in soybean meal, highlighting a key differentiator in protein content.
Source: Canadian Cattlemen