Glacier FarmMedia – Nearly seven months of price pressures and fund selling creating a lengthy downturn have given way to canola trending higher for the first time in 2024.
The oilseed continued its month-long rise during the week ended March 20, gaining more than C$70 per tonne since late February. The May contract hit its highest price since Jan. 4 at C$650/tonne before closing at C$648.60 on March 20, a weekly gain of C$23.60.
Winnipeg-based commodities investment advisor David Derwin from PI Financial said a combination of the funds covering some of canola’s record net short position, other grains breaking their own trends and the start of spring has fueled canola’s breakthrough to the upside.
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“As we come into the end of March, we begin a seasonal period, which can keep going until May, June or July,” he added. “We are just seeing a reversal of all that trading behaviour.”
Derwin also considered recent rises in Chicago soyoil as well as palm oil futures as supportive factors. However, the relatively small size of the canola market compared to other vegetable oils can create sharper price increases or declines.
“If funds need to exit out of soybeans, they can do a lot of buying before it can cause much change in price, whereas with canola, it just takes a little bit of buying because it’s so much smaller,” he said. “Palm oil has helped. Soyoil has helped. But canola, in many ways, is doing a good chunk on its own.”
Any news that can affect canola’s current trajectory may not occur before the oilseed rises close to C$700 per tonne in the next few weeks, according to Derwin. Whether it will reach that mark is anyone’s guess.
“All that means is that there’s not a lot of price resistance until we get into some of those higher levels,” he said.
— Adam Peleshaty reports for MarketsFarm from Stonewall, Man.
