MarketsFarm — ICE Futures canola contracts backed away from nearby highs during the week ended Wednesday, but historically wide crush margins should keep the market well supported going forward.
“The crush margins are unsustainably high,” said Ken Ball of PI Financial in Winnipeg, pointing to margins that currently work out to over $200 per tonne above the nearby futures.
“Canola should be performing sturdier than the soy market, although whether that means (prices) will go up or not is hard to say,” Ball said. He expected crush margins would work down into a $150-$200 per tonne range over the next few months.
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Easing crush margins would be achieved by higher canola prices, but could also occur if canola held steady while the product values declined.
“There’s no reason to expect a big upside in canola,” said Ball, noting prices are still historically high. “It wouldn’t be a shock to see $900 (per tonne) canola if (soybean) oil can stay where it is.”
That said, a lack of dramatic shortages of oilseeds anywhere in the world may limit the upside.
Outside influences, such as the ongoing war in Ukraine, could also influence futures markets, according to Ball.
— Phil Franz-Warkentin reports for MarketsFarm from Winnipeg.
