Canola Price Adjustment Guidelines

This guide explains how to calculate the adjusted price of canola based on the payment scale selected in the contract. There are three primary payment scales:

1. Flat - No adjustment to the agreed-upon price per tonne of the commodity.
2. AOF - Basis 42% Oil, 0% Admix
3. AOF - Basis 42% Oil (Cap 46%), 0% Admix

1. Flat Payment Scale

Under the Flat Payment Scale, the price per tonne of canola is fixed. There are no adjustments made regardless of the oil content or the admixture level in the delivery.

2. AOF - Basis 42% Oil, 0% Admix

Calculation Steps:

1. Admix Adjustment: For every 1% of admixture (above 0%), 1% is deducted from the base price per tonne.
2. Oil Content Adjustment: For every 1% deviation from the 42% oil requirement, 1.5% is added or deducted from the price adjusted for admixture.

Example:

• Base Price: $500 per metric tonne
• Admixture: 1%
• Oil Content: 40%

Step-by-Step Calculation:

1. Admix Adjustment:

   Adjusted Price= Base Price - (Admix x Base Price) = $500 - (0.01 x 500) = $495

2. Oil Content Adjustment:

   Final Adjusted Price=Adjusted Price+(((Oil Content−42)/100)×1.5×Adjusted Price)=$495+(((40−42)100)×1.5×495)=$480.15

Thus, the final adjusted price per tonne is $480.15.

3. AOF - Basis 42% Oil (Cap 46%), 0% Admix

This payment scale functions similarly to the previous one but introduces a cap on the oil content adjustment.

Key Differences:

• Oil Content Cap: Any price increase due to oil content is capped at a maximum of 6%. This means the adjustment stops at 46% oil content even if the actual oil content is higher.

Example:

• Base Price: $500 per metric tonne
• Oil Content: 55%

Step-by-Step Calculation:

1. Admix Adjustment: Since the admixture is 0%, there is no adjustment needed here.

2. Oil Content Adjustment:

   • Oil content above 46% is capped, so use 46% for the calculation.
3. Adjusted Oil Content=min⁡(46,55)=46 
   • Calculate the oil adjustment:
4. Final Adjusted Price=Base Price+(((Adjusted Oil Content−42)/100)×1.5×Base Price)=$500+((46−42)x100)x0.5×500)=$500+$30=$530

Thus, even though the actual oil content is 55%, the price adjustment is capped at the 46% oil content level, resulting in a final adjusted price per tonne of $530.