MarketsFarm — After trading rangebound during the week before the Labour Day long weekend, canola started the month of September by taking a tumble.
The November canola contract stayed between $800-$821 per tonne from Aug. 24 to Sept. 1, with closing prices between $809-$812/tonne. When ICE Futures resumed trading Tuesday, the price dropped $13.90, to $797.50/tonne, its first sub-$800 close since Aug. 22.
On Wednesday, the November canola contract lost another $2.30 per tonne to close at $795.20.
Ken Ball, a Winnipeg-based trader from PI Financial, said harvest pressure was the main factor driving canola’s recent downturn — but it wasn’t the only one.
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“From what we’re hearing, growers aren’t selling canola at harvest,” he said. “It’s still a fairly attractive price compared to other markets. Canola is the choice for generating some cash at harvest time… With harvest pressure around for the next few weeks to a month, it’s probably going to be a bit sluggish.”
Ball added that ABARES raising its Australian canola production forecast to a plentiful 5.2 million tonnes also put pressure onto the market. He also expects Statistics Canada (StatCan) to add one million tonnes of canola to its 2022-23 total in its grain stocks report to be released Friday (Sept. 8).
StatCan will also release its latest model-based principal field crop estimates on Sept. 14.
“A little extra canola is going to be added to the books. Although that has been already known to some degree,” Ball said. “Probably next week for canola, we’ll see some higher numbers for the canola crop. I’m not sure it will be a lot higher, but it would be slightly higher.”
Speculation that canola could potentially fall to $780 per tonne — and possibly further down — is a bit too early, according to Ball.
“Crush margins are at fairly extreme highs. You wouldn’t expect canola to necessarily go down a lot, but soyoil is looking a bit sluggish even though it hasn’t moved much,” he explained. “I wouldn’t look for a big collapse. The pressure could be off and on for a few weeks.”
— Adam Peleshaty reports for MarketsFarm from Stonewall, Man.
