MarketsFarm — The ICE Futures canola market continued its months-long downtrend as the calendar flipped over to November, with the futures looking for an outside catalyst to spark a corrective bounce.
While canola has seen occasional attempts at correcting higher over the past two months, any gains proved short-lived.
“The oilseeds are very swingy and erratic right now,” said Ken Ball of PI Financial in Winnipeg, adding that “canola is struggling to hold.”
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Speculative money was on the short side and fund traders were showing little interest in exiting those bearish bets or going long for the time being, he noted.
From a fundamental standpoint, “canola is fairly cheap,” Ball said, pointing to wide crush margins and steady domestic processor demand.
However, he added, while canola may be attractively priced, “that doesn’t mean people are rushing to buy it.”
After losing nearly $150 per tonne over the past two months, Ball anticipated canola could be near its harvest lows, noting “it’s a bit of a mystery why (canola’s) not attracting more interest.”
While he expected a bounce in canola was inevitable, “it will need a bit of help… (and) we may just stay sideways and listless for a while.”
Gains in Chicago soyoil would be one possible supportive influence, with any weather concerns in South America also having the potential to support canola.
However, Ball added, while conditions in Brazil and Argentina weren’t perfect, soybean crops there were getting enough precipitation for the time being, which was limiting the potential any weather-related spillover support.
— Phil Franz-Warkentin is an associate editor/analyst with MarketsFarm in Winnipeg.
