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Canola values slip lower in U.S. traders’ absence

Traders are largely gun shy while waiting on StatsCan data

It was a sluggish week for ICE Futures Canada canola prices as the U.S. Thanksgiving holiday sent traders to the sidelines. Markets in the U.S. were closed on Thursday and had limited hours on Friday.

The front-month January contract chopped around between the $514 and $520 marks for the beginning of the week ended Nov. 24. Volumes were thin and spread action generally wasn’t as busy as in weeks previous. Things changed on the U.S. Thanksgiving holiday, though, when U.S. traders were absent from the market and some speculative selling took hold. Thin volumes exaggerated the losses and canola slipped below major support. It ran into a minor support level at $512, which stemmed the financial bleeding.

End-user demand has been reasonably solid, with some speculative buying throwing support under the market.

That said, foreign demand is a bit of a concern for the market right now. Commercial operators reported sales on the books are somewhat low for this time of year and they are looking for things to pick up.

Funds are long and are expected to look for additional purchases if the market stays higher. Many traders will be leery to push the market too far one way or the other before Statistics Canada’s production estimates come out on Dec. 6.

Farmer selling is somewhat quiet, with targets for nearby delivery at $11.50 a bushel.

The Canadian dollar strengthened over the week, falling below the 78 U.S. cents mark on Tuesday (Nov. 21) before regaining strength and approaching the 79 U.S. cents mark on Friday.

In the U.S., corn stayed rangebound as traders positioned themselves in the lead-up to the Thanksgiving break. The market took support from slow farmer selling and technical buying. The cash basis in the U.S. is said to be very weak right now. Futures felt pressure from fresh forecasts indicating world corn production will be larger than previously projected.

Soybean futures were a little more active than some of the other agricultural markets, jumping from the US$9.90-per-bushel (January contract) level early in the week to just under US$10. The U.S. harvest has virtually wrapped up and soybean planting in Brazil is proceeding smoothly, which was bearish. Speculative buying helped prop up values somewhat, but the market is still being pressured by India’s decision to raise tariffs on vegetable oil imports.

About the author

Columnist

Dave Sims writes for Commodity News Service Canada, a Winnipeg company specializing in grain and commodity market reporting. Dave has a deep background in the radio industry and is a graduate of the University of Winnipeg. He lives in Winnipeg with his wife and two beautiful children. His hobbies include reading, podcasting and following the Atlanta Braves.

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