GREY:BIXZF - Post by User
Comment by
AlbertaBankeron Nov 17, 2010 6:28pm
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Post# 17721388
RE: RE: "continued weak crush margins"...
RE: RE: "continued weak crush margins"...@ Ogo
Supply and Demand can work in both ways. A 40,000MT Plant would never be economical for Canola Oil. The difference is that this plant is in Phase 2 to get Protein Isolates and move up the Value Chain. That is where the economics come into play.
To address your above points which are correct BTW:
Funny how last year, with record canola crops, crush margins got hammered according to mngmnt here due to too much Canola in the market place
Canola prices were low last year, between $7 to $9/bushel. You are right there was a Crop Surplus. That same Surplus was placed into a Surplus Canola Oil Supply with little demand in the end market due to the recession. I am not sure what BXI pays Viterra. It is possible that they have a terrible fixed price contract that worked against them in 2008 and 2009. I would hope they would have had a lower input cost in 2008 but we will never know.
This year opposite situation re yield but same crappy margins. Why?
This year we have a lower Canola supply, but the margins are still bad. Reason? I can only surmise that their input costs are uneconomical for a 40,000MT Plant Capacity. Simply put their economies of scale is not geared to Canola Oil. This year they would have far higher Input costs. Especially if the farmers are receiving 30 year high commodity prices.
Canola prices will have a influence on BXI input costs.
I did not buy a Canola Oil company but a Protein Isolate company. Ideally for the future potential.