Harvest pressure, combined with a selloff by the funds, continued to bring down canola prices for the week ended Sept. 28 — but, just like the outlook for early fall temperatures for the Prairies, it’s anyone’s guess whether they’ll go up or down.
The ICE Futures November canola contract dropped $9.80 per tonne to close the week at $715.50. It was also the ninth straight session to close below the 20-, 50- and 100-day averages. The contract appeared to hit a support level of $710/tonne on Sept. 26 and rose nearly $20 higher the next day. However, the pressure came back and the contract lost $10.60/tonne on Sept. 28.
Despite the warm and dry weather much of the Prairies have seen so far this fall, many canola fields which haven’t been combined yet. Even if prices were to bounce back up, ongoing harvest pressure may limit future gains.
Read Also
Manitoba sclerotinia picture mixed for 2025
Variations in weather and crop development in this year’s Manitoba canola fields make blanket sclerotinia outlooks hard to pin down
The Chicago Board of Trade (CBOT) soy complex often exerts influence on canola prices and another indication that the latter could go down is the net long positions the funds have for CBOT soybeans (38,414), soymeal (56,005) and, most importantly, soyoil (47,554).
However, the collective belief from traders and analysts remains that canola has been oversold during the past few weeks. There is more than a fair share of indicators to suggest prices may have already reached their depths.
From Sept. 19 to 26, the November and January canola contracts were below 30 in the Relative Strength Index, suggesting they were oversold. Both contracts straddled the 30 value at the end of trading on Sept. 28. On Sept. 19, the funds had a net short position of 14,538 contracts.
As for the soy complex, elevated crush margins, dryness across much of the U.S. Corn Belt during the growing season, and extremely hot temperatures welcoming the start of Brazilian plantings could all give canola prices a boost. Low levels on the Mississippi River hindering traffic also have their own set of problems.
Reduced crude oil exports from Russia and Saudi Arabia, as well as depleted U.S. stockpiles, will also provide a boost to canola while analysts wait for the day crude oil surpasses US$100 per barrel again.
With more canola still to be put in the bin, in the absence of all other factors, prices should come down. However, as is the case for an oilseed whose market performance is interconnected with other commodities, canola should be well supported.
