MarketsFarm — While the ICE Futures canola market declined during the week ended Wednesday, the oilseed has been affected by a mixture of supports and pressures, according to commodities futures advisor David Derwin of PI Financial in Winnipeg.
The July canola contract dropped $20.60 per tonne during the week to close at $714.10 on Wednesday, while the November contract fell below the $700 per tonne mark, losing $25.70 on the week, to $685.90.
Derwin said canola prices typically move upward at this time of year, but macroeconomic factors have had their way as of late.
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“Canola has been drifting sideways (for) the last week or so, hovering around the $700 mark for new- (and old-) crop canola,” he said. “On its own, canola’s been a little bit quieter.”
Meanwhile, the Chicago soy complex has been in a spiral, with the July soybean contract losing 67 U.S. cents per bushel over the past week to close at US$13.37. The July soyoil contract gave up 5.64 U.S. cents per pound, to 46.41, and has gone down in seven of the last eight trading days.
Brazil’s record soybean crop, declining crude oil prices and last week’s bearish supply/demand report from the U.S. Department of Agriculture (USDA) have pressured soybean prices, but not so much canola, according to Derwin.
“Canola has actually held up pretty well, considering,” he said. “(The report) wasn’t overly bullish. As a result, the prevailing underlying trends remained the same and gravity kicked in, pulling (soybeans) lower.”
As new-crop canola went under the $700/tonne mark, Derwin thinks there is room for it to go lower.
“I guess it could go down to $680 (or) $670/tonne,” he said. “The trends are still pointing lower. I wouldn’t be surprised to see a little bit of seasonal movement higher, but there is room for the market to go lower… But it doesn’t go straight down. Maybe it takes a break in the next month or so if the weather is questionable.”
In the short term, Derwin said determining where canola could go is a “coin flip.”
“Even with a prevailing downtrend, it could go down $20 to $40 (per tonne) and it could go up $20 to $40. Every couple of weeks, it’s hard to say where (canola’s) going to go.”
— Adam Peleshaty reports for MarketsFarm from Stonewall, Man.
