MarketsFarm — New-crop canola prices on ICE Futures seemed to be destined to remain well below $700 per tonne, according to analyst Errol Anderson of ProMarket Communications in Calgary.
“The market tends to be back where it came from,” Anderson said, stressing that chances of canola pushing higher requires fresh bullish news. “It’s got to have a reason to recover.”
“To me it has to come from the demand side, not the supply side. It has to be the buyer stepping forward.”
Otherwise, Anderson said, the November contract could fall back to as low as $620/tonne, although the current support level is at $650.
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“Technically we are oversold,” he said, adding that the ‘new Cold War’ between the U.S. and China isn’t helping any of the markets.
China has been cutting its soymeal purchases, switching to feed wheat as it’s cheaper, he said. In turn, that’s seen soymeal prices on the Chicago Board of Trade (CBOT) take a hard hit.
Another element in keeping canola prices under $700 is the price of crude oil. Anderson said he doesn’t believe the hype of crude rising toward US$100 per barrel; rather he said it’s going to remain at US$50-$60. Without spillover from strong crude prices, there would be insufficient support for any vegetable oils to rise by a great measure.
— Glen Hallick reports for MarketsFarm from Winnipeg.
