MarketsFarm — After a losing string of four straight sessions, the ICE Futures March canola contract regained some strength on Wednesday.
Limited and choppy trading in nearby soybean contracts had pulled down canola for most of the week, according to Winnipeg-based independent trader Jerry Klassen.
“When the March got up to $868-$870 (per tonne)… there was still some farmer selling at the higher levels,” he said. “Everyone who wanted to sell at that level has likely done so at this time and secondly, (farmers) are not going to make any sales until mid-January.”
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As the harvest in southern Alberta presses on, a broker said that is one of the factors pulling feed prices lower in the region. Darcy Haley, vice-president of Ag Value Brokers in Lethbridge, added that lower cattle numbers in feedlots, plentiful amounts of grass for cattle to graze and a lacklustre export market also weighed on feed prices.
On Tuesday and Wednesday, however, canola prices made a comeback, with the March contract rising by $11.50 per tonne in that span.
“We’re seeing some strength in the (soyoil) futures here. It’s largely setting the direction for the canola,” he said. “Canola is garnering some of that strength, spillover support into the domestic crush margins.”
Klassen added that commercial stocks are at 1.2 million tonnes, which he considers to be “snug.” Add in limited farmer selling and an inverse in the ICE Futures market and he believes canola is striking a bullish tone.
“You’ve got the bean oil and the bean meal improving the crush margin structure and it’s giving us a steady tone,” he said. “We’re kind of winding down for the holiday season, but we could see the funds start to come in here on the buy side because the market has held above the 20-day average over the last two days.”
He expects a softer tone until New Year’s Day.
“You have outside influences. It looks like there are beautiful (soybean growing) conditions in Brazil. Argentina’s on the dry side, but they still have time,” Klassen said. “The commercial demand kind of goes to sleep over the holiday season, until the second week of January.”
— Adam Peleshaty reports for MarketsFarm from Stonewall, Man.
