MarketsFarm — The ICE Futures canola market ran into a profit-taking correction on Wednesday, backing away from recently-hit contract highs.
While a further correction is possible, the underlying fundamentals remain supportive and canola is expected to retain its relative strength to other oilseeds.
“The market needs bullish fuel, but it’s just not getting any,” said Ken Ball of PI Financial in Winnipeg, pointing to Tuesday’s relatively-neutral U.S. Department of Agriculture monthly supply/demand (WASDE) report and expectations for large South American soybean crops despite nearby weather concerns.
“The market is just getting hit with a small flush of liquidation,” Ball said. Underlying fundamentals for canola are much tighter than for soybeans, which he thought should keep the Canadian oilseed well supported.
Canola needs to remain strong relative to other oilseeds in order to ration supplies ahead of the new crop, he noted, with any losses likely seen as buying opportunities by commercial end-users.
“You could easily build a case for soybeans going down… but if soyoil stays up, canola won’t go down that much,” Ball said.
Chicago Board of Trade soybeans were down sharply in the most active contracts on Wednesday, but soyoil settled well off its session lows.
— Phil Franz-Warkentin reports for MarketsFarm from Winnipeg.