Glacier FarmMedia | MarketsFarm — The turnaround in canola futures on the Intercontinental Exchange should be seen as a “gift,” according to broker Tony Tryhuk of RBC Dominion Securities in Winnipeg.
Tryhuk pointed out two major issues involving canola the trade has been ignoring that would otherwise put pressure on values: the strike by grain workers at the Port of Vancouver and China’s investigation into alleged canola dumping by Canada.
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“The issues in Vancouver should be overhanging the market. The China thing should be overhanging the market. Instead, our market put in a $60 to $80 rally from the lows in pretty short order,” the broker stated.
Tryhuk said the trade strongly suspects the federal government will intervene in the labour dispute between the Grain Workers Union Local 333 and the Vancouver Terminal Elevators Association, should it begin to carry on with no resolution in sight. Before the end of the strike’s first day on Sept. 24, the federal labour minister arranged for a mediator to help both sides at the bargaining table.
As for China, Tryhuk said it continues to have little effect on canola. When China first announced its action against the Canadian oilseed, values dropped sharply but have since regained that lost ground and then some.
However, he warned the trade will inevitably pay attention to China when it’s year-long investigation into Canadian canola sales during 2023/24 wraps up.
Tryhuk credited the technicals for the remarkable about-face in canola. He said canola’s November contract rose above its 20- and 50-day moving averages which spurred some bullish sentiment, coupled with some short covering.
One source of pressure on canola Tryhuk noted was farmer selling. He said there was already some going in the market during the week of Sept. 23 with more likely to follow. He added that he hopes producers take advantage of the increases when strong negative influences could have pushed prices the other way.
“To us, this looks like a bit of a gift.”
