MarketsFarm — Unless something very dramatic were to happen in the coming weeks, canola futures on the ICE Futures platform will remain rangebound at least until spring, according to David Derwin, analyst with PI Financial in Winnipeg.
“Canola has been very rangebound for the last six to seven months,” he said, noting downward fluctuations during the first three days of the week of Jan. 9.
“But it’s not a big move in advance of the [Jan. 12] USDA reports,” he added.
On that Thursday, the U.S. Department of Agriculture is scheduled to release a slew of reports that include the annual crop report, quarterly grain stocks, monthly supply and demand (WASDE) and weekly export sales.
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In the days heading into these reports, it’s unclear as to what direction the Chicago Board of Trade (CBOT) will take and how those movements could affect ICE canola prices.
Derwin listed several other items that could factor in any movement in canola — namely the drought in South America becoming much worse rather than improving, any significant change in the Russia-Ukraine war, a major shake-up in the financial markets, and a dramatic change in crude oil prices.
CBOT soyoil and Malaysian palm oil have been rangebound as well, he added. Unless one or both of those break one way or the other, it’s very unlikely canola will bust out of its $800-$900 per tonne range.
He suggested a combination of all of the above items might do the trick, otherwise the markets will have to sit tight until spring.
“Typically we can get a seasonal rally in April, May and June,” Derwin said.
He stressed this is not a time for farmers to become complacent with old- or new-crop pricing. He suggested they could hedge some new crop without locking it in.
“$800 is a pretty good price for canola and let’s not forget that,” he said.
— Glen Hallick reports for MarketsFarm from Winnipeg.
