MarketsFarm — ICE Futures canola contracts fell hard during the week ended Wednesday, with little indication of how much more room to the downside there could be.
“Once the snowball starts rolling, it just rolls,” analyst Mike Jubinville of MarketsFarm said, adding there were no dynamic changes to the generally supportive canola fundamentals — but broad concerns over a looming global recession had speculators bailing out of vegetable oil markets.
The most-active November contract has lost over $100 per tonne over the past week, settling Wednesday at $912.10.
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While there’s a technical argument to be made that canola has quickly become oversold, “as long as the spec guys are panicked and liquidating longs, who knows how far we’ll go?” said Jubinville.
He expected to eventually see some stabilization but added that a return to the highs was also unlikely without a return of the drought conditions seen in 2021.
While there is still a long growing season ahead, Jubinville noted canola also typically comes under pressure at this time of year, as seeding has wrapped up and weather concerns have not yet developed.
The losses over the past week likely triggered some farmer selling, with scale-down commercial buying also picking up, according to Jubinville.
— Phil Franz-Warkentin reports for MarketsFarm from Winnipeg.
