Canola Price Adjustment Guidelines

Introduction

This guide explains how canola prices are adjusted under each payment scale available in AgriChain. The three primary scales are:

1. Flat 

2. AOF - Basis 42% Oil, 0% Admixture (Admix)

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

Payment Scale Summary 

1. Flat 

• No oil adjustment.
• No admix adjustment.

2. AOF - Basis 42% Oil, 0% Admixture (Admix)

• Price is adjusted by 1.5% for each percentage point above or below 42% oil.
• Price is reduced by 1% for each 1% admix.
• No cap applies to oil content adjustments.

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

• Price is adjusted by 1.5% for each percentage point above or below 42% oil.
• Price is reduced by 1% for each 1% admix.
• Positive oil adjustments are capped at 46% oil content.
  
  

Calculation Steps

Note: Higher oil content increases the settlement price, while higher admix reduces it.

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.

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 each 1 percentage point that oil content differs from the 42% basis, the price is adjusted by 1.5% of the admixture-adjusted price. 

Example: 

Base Price: $500.00 per metric tonne
Admix: 1%
Oil Content: 40%

Admix Adjustment

Adjusted Price = $500 − (0.01 × $500)

Adjusted Price = $495.00

Oil Content Adjustment

Final Adjusted Price = $495 + (((40 − 42) ÷ 100) × 1.5 × $495)

Final Adjusted Price = $495 + (-0.02 × 1.5 × $495)

Final Adjusted Price = $495 − $14.85

Final Adjusted Price = $480.15

Result: The final adjusted price per tonne is $480.15.

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. 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: $500.00 per metric tonne

Admix: 0%

Oil Content: 55%

Adjusted Oil Content

Adjusted Oil Content = MIN(46, 55)

Adjusted Oil Content = 46

Oil Content Adjustment

Final Adjusted Price = $500 + (((46 − 42) ÷ 100) × 1.5 × $500)

Final Adjusted Price = $500 + (0.04 × 1.5 × $500)

Final Adjusted Price = $500 + $30

Final Adjusted Price = $530.00

Result: Although the actual oil content is 55%, the positive adjustment is capped at 46% oil content. The final adjusted price per tonne is $530.00.