CNS Canada — The ICE Futures Canada canola market moved higher during the week ended Wednesday, despite losses seen in the Chicago soybean market, which normally drives canola.
“It’s good sturdy firmness, but I don’t know if there’s anything special behind it,” said Ken Ball of PI Financial in Winnipeg. “Traders tend to trade canola off the U.S. markets one way, and then they’ll trade it off the other way after a while.”
Continued solid demand for Canadian canola is helping keep the market firm, with the weak Canadian currency making the commodity attractive to end users.
Crushers remain steady buyers of canola, despite the recent closure of the Louis Dreyfus crushing plant at Yorkton, Sask. [Related story]
Ball said he suspects the crushing facility is now back up and running to some degree, but calls to the company couldn’t confirm whether that’s the case.
“I noticed on last week’s crush, it went up quite a bit to a level that I’m not sure they would’ve easily been able to maintain without the Dreyfus plant,” he added.
The Canadian Oilseed Processors’ Association said 145,019 tonnes of canola were crushed during the week ended Dec. 10, up from 133,379 tonnes the week prior.
Good demand, paired with continued slow farmer selling as farmers wait for the new tax year, may be supportive for the market — but it’s only a matter of time before it breaks lower.
“Canola is displaying relative firmness here, relative to the U.S., which is good. But again, you’ve got to question how long that’s going to last,” said Ball.
“I’d be surprised if it lasts very much longer if the U.S. markets stay weak. The U.S. markets could rebound and support canola further, but if the U.S. markets stay soft, I think it’s just a matter of time before canola starts to roll over and follows them down.”
Producers should also be selling on the recent strength in canola, he said, as it’s giving them very good pricing opportunities.
“They probably should be moving some product here because the U.S. markets are starting to tail off and I think canola is living on borrowed time.”
— Terryn Shiells writes for Commodity News Service Canada, a Winnipeg company specializing in grain and commodity market reporting.