MarketsFarm — At least for the foreseeable future, ICE Futures canola is likely to remain rangebound, according to analyst David Derwin of PI Financial in Winnipeg.
The November canola contract has support at $850 per tonne and when it bumps up to around $900 it’s quickly pulled back, he said.
“Sideways is not very exciting, but that’s what we are going to see,” he said.
Canola had been slipping back until Statistics Canada released its updated production numbers on Tuesday. In the report, 2021-22 production of the Canadian oilseed was cut from 14.7 million to now 12.8 million tonnes.
However, there have been several indications from the trade that canola should have been cut further, perhaps by another one million tonne, based on the differences between the canola yields reported by the Prairie provinces and the slightly higher yields estimated by Statistics Canada.
Furthermore, the federal agency won’t issue another production report until December, leaving the trade to piece together the puzzle on its own.
Derwin noted a good amount of canola this year has been pre-sold, leaving very little for farmers to sell “straight off the combine” to elevators or crushers.
Since canola is well entrenched in the movement of soyoil on the Chicago Board of Trade (CBOT) and Malaysian palm oil, Derwin said both have been rangebound as well. That, in turn, leaves canola very little room to manoeuvre outside its own range.
— Glen Hallick reports for MarketsFarm from Winnipeg.