MarketsFarm – As prices fall back, an analyst said it’s very common for there to be occasional spike upwards, and that’s exactly what’s been happening to canola.
“We’ve come down a long way and having a bit of a rally wouldn’t be unusual,” commented analyst David Derwin of PI Financial in Winnipeg, Man. “After we had all of the markets pull lower in the last month or so, we have seen fluctuations both ways.”
On July 20, the nearby November canola contract on the Intercontinental Exchange fell C$21.80 to close at C$817.20 per tonne. In the days prior to that, the November broke below C$800, a far cry from the C$1,200 canola seen months earlier.
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By July 27, November canola made some headway to sit at C$824.40/tonne. That Derwin noted was due in part of higher prices for global crude and other vegetable oils.
He said the November contract presently has its support level at C$800/tonne, adding that Minneapolis September wheat has its support at US$9/bushel and that Chicago September corn is at US$5.75/bu.
Derwin stressed it’s best to watch the movements of ‘the King of Commodities’ as well as ‘the King of Currencies,’ those being crude oil and the United States dollar respectively. He said both set the tone for the grain markets, stating a stronger greenback is not good for the grains. Stronger crude oil, he said, helps the vegetable oil market, including canola.
Derwin also spoke of the agreement brokered last week by the United Nations and Turkey that allows Ukraine to export grain out of its war-torn ports. Since the beginning of the Russian invasion of Ukraine, the latter has had tremendous difficulty in shipping its grain to its customers.
The deal is said to permit Ukraine to use its port of Odesa and others nearby. Ukraine said it should be able to move 3.5 million tonnes of grain per month, with the first outbound shipment before the end of July. Derwin said the deal pulled the markets lower, especially wheat.
