MarketsFarm — A huge drop in canola prices could be looming, according to analyst Wayne Palmer of Exceed Grain in Winnipeg.
Palmer pointed to Prairie farmers and said, “I think they are undersold.”
He surmised too many farmers have held off from selling their canola, in hopes of getting a great price the next time it goes up.
“There may not be a next time we get $900 per tonne for November canola,” he warned.
Farmers are likely angry they didn’t sell for $25-$30 per bushel, and it’s now very likely they won’t get anything over $20/bu., he said.
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With a massive long position still lurking in the canola market, Palmer stressed prices could easily tumble as we get closer to harvest. The situation could turn into one in which farmers and funds are attempting to sell their canola at the same time.
He explained buyers from China bought canola before the extremely sharp price hikes the market witnessed over the last year or so.
The analyst noted growing conditions and the weather continue to be quite good across the region — something that will also weigh on prices, barring some sort to catastrophic weather event.
Other than that, Palmer said canola will continue the follow the path set by soyoil at the Chicago Board of Trade (CBOT).
— Glen Hallick reports for MarketsFarm from Winnipeg.
