Marketsfarm – While the recent gains in canola on the Intercontinental Exchange were likely generated by the spreaders, the market will probably become choppy, according to Ken Ball, trader with PI Financial in Winnipeg, Man.
“Spreaders for the last few days have been selling canola and buying soyoil,” Ball suggested in a July 26 interview, noting that canola lost between C$60 to C$70 per tonne prior to the latest turnaround.
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While it’s uncertain as to how long canola could be on the upswing, Ball expected it to last at least two to three days.
“Meanwhile crush margins are oscillating wildly…which must drive the packers nuts,” he commented.
Ball said it’s hard to tell who exactly is behind the upward shift in canola, but it might even be some of the packers themselves.
Rain across most of the Prairies during mid-July brought some relief to struggling crops, although some areas of the region missed out while other parts have received too much, the trader said.
“I would say overall canola has improved considerably in many areas, but not in all,” he asserted.
As several of the grains and oilseeds made modest to sharp gains recently, with some trimming back, Ball said the markets will now pause to see how the crops finish developing.
“Then they’ll make their move from there,” Ball said of the trade.
He also said the next supply and demand estimates from the United States Department of Agriculture need to be watched closely, noting “it’s going to be a big one.”
“The markets are not sure if the USDA is going to deal with the acreage issue or not,” Ball stated.
The June report placed planted soybean acres in the U.S. at 87.5 million, while the July report cut that down to 83.5 million. Corn acres were increased from June’s 92.0 million to 94.1 million.
“And it’s the first full surveyed yield for the corn and soybean crops,” Ball added.
The USDA will publish its supply and demand report on August 11 at 11 am CDT.
— Glen Hallick reports for MarketsFarm from Winnipeg.
