For a fleeting moment on Oct. 4, it looked like the nearby November canola contract might pierce the $900 per tonne mark.
It would have been the culmination of a meteoric $28/tonne intra-day rise for the oilseed, and a $90 rise over the previous eight sessions, if it hadn’t hit a wall and fallen to a close of $863.70/tonne.
ICE weekly outlook: Canola’s wide crush margins supportive
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That price jump appeared to be more of an aberration than a sign of things to come. Despite waning harvest pressure and a weakened Canadian dollar, crush margins are starting to ease. However, with margins still at more than $200 above the futures, the crush market looks very appealing.
From Aug. 13 until Oct. 4, November canola had not crossed the $880/tonne mark, let alone the $900 mark. Much of that had to do with more favourable growing conditions on the Prairies compared to the previous year, but $880 appears to be a good selling point for growers.
Growing export demand on a much improved but still light 2022-23 domestic canola crop of 19.5 mil- lion tonnes could push prices upward, but spillover from soybeans could be a limiting factor.
Soybean prices have been in a bearish pattern since the United States Department of Agriculture (USDA) released its Quarterly Grain Stocks report on Sept. 30, which augmented its carry-in total for the crop to 273 million bushels as of Sept. 1.
When you add in declines in soy meal prices and U.S. export demand with early indications of favourable planting conditions in Brazil, canola prices could be pressured further.
When the report showed U.S. corn stocks at 1.377 billion bushels, more than 100 million below pre- report estimates, December corn jumped nearly 27 cents to US$6.96 per bushel. Since then, the price has declined to $6.72/bu., mainly due to favourable harvest conditions. With harvest ending and frost becoming more prevalent, corn prices could be given a boost.
Wheat stocks were on the lower end of pre-report estimates at 1.776 billion bushels. Adding to bullish price activity is dryness in the U.S. southern plains, which wreaks havoc on winter wheat plantings. This has erased any price premium Minneapolis spring wheat had on the Kansas City hard red winter variety and a lighter worldwide wheat crop could push prices further upward.
The USDA will release its monthly World Agriculture Supply/Demand Estimates (WASDE) report on Oct. 12, which may cause significant price movement on the Chicago Board of Trade. However, if production figures move in the same direction as those from the Quarterly Grains Report, prices may only shift a little.
