Glacier FarmMedia — With the speculative fund selling and relatively decent crop conditions on the Canadian Prairies, a broker said canola futures have little option but to continue falling back.
Over the last week, the most heavily traded new crop November canola contract has tumbled C$53.50 at C$681 per tonne on July 9.
“The turnaround is going to be as a result of the commodity funds slowing down their selling, and/or a change in the weather forecast that would reduce the amount of precipitation,” said Tony Tryhuk of RBC Dominion Securities in Winnipeg on what would be needed to stop canola’s sharp slide.
Read Also
CBOT weekly: USDA/weather in focus for corn and soybeans
Warm Midwestern temperatures and timely precipitation weighed on corn and soybean futures at the Chicago Board of Trade coming out of the Independence Day long weekend. Weather should remain a major market driver through the growing season, although some short-term direction could come from the monthly United States Department of Agriculture supply/demand estimates due out on July 11.
He added that dry conditions on the Canadian Prairies are concerning to the trade, especially those in Saskatchewan. However, rain is in the region’s forecast.
“Which is helping to create some weakness in the market,” he said.
Should conditions on the Prairies become drier instead, Tryhuk said prices will swing upward.
Market volatility has been another feature in recent canola trading, which Tryhuk said is typical for the growing season.
That volatility is further exacerbated by a lack of farmer selling.
“The magnitude of the moves tend to be accelerated a little bit as a result of the lack of participation,” Tryhuk said.
He noted that farmers generally don’t trade very much during the summer months.
