Your Reading List

Wittal: Analysts view canola as overpriced

Feb. 26 — Financial markets remained flat to down in response to the U.S. budget being released. It’s seen as being neutral to unfriendly for the markets overall.

The U.S. dollar dropped a quarter of a cent today, again mainly because of the budget.

Crude oil jumped $2.72 per barrel to close at US$45.22. This and a low Canadian dollar are the only reasons that oilseed futures are holding at current levels.

The Canadian dollar was up 0.2 cents to close at US80.08 cents.

Corn was down one to two cents per bushel, beans were down five to 12 cents per bushel and wheat was down seven to 13 cents per bushel.

Canola was down $3 to $6 per tonne and barley finished even to down $1 to $4 per tonne for the day.

Further rumours today are that as many as possibly 13 shipments of beans had been cancelled from the U.S. to China, due to the previously higher values at which they were sold.

A number of technical and fundamental analyst reports that I have read lately forecast canola to drop to the $350- to $370-per-tonne ranges over the coming months due to large supplies, anticipated large seeded acreage and mediocre export sales volumes.

Canola values are viewed as being overpriced compared to other oil crops such as palm and soy on the world markets at this time, which tells me we can expect to see futures fall further in an effort to improve export sales volumes going forward.

All of this would suggest that it is time to take action and protect profits for new-crop by pre-pricing some grain for fall delivery and/or using futures or options to protect yourself on paper between now and harvest.

Please consult a commodities broker as to the details and risks involved with futures or options trading before employing any such strategies.

Now is the time to plan ahead and ensure profits are secured.

“Profit” is a good word; it makes everybody happy!

That’s all for today. — Brian

Brian Wittal has spent over 27 years in the grain industry, including as an elevator manager and producer services representative for Alberta Wheat Pool, a regional sales manager for AgPro Grain and farm business representative for the Canadian Wheat Board, where he helped design some of the new pricing programs. He also operates his own company providing marketing and risk management advice for Prairie grain producers. Brian’s daily commentaries focus on how domestic and world market conditions affect you directly as a grain producers.

Brian welcomes feedback and information on market conditions in your area, such as current offering prices, basis levels, trucking premiums and special crops contracts. Contact Brian today.

explore

Stories from our other publications