MarketsFarm — ICE Futures canola contracts fell to their lowest levels in three and a half months during the week ended Wednesday, taking some direction from Chicago soyoil as harvest activity winds down across the Prairies.
Losses in other markets, including Malaysian palm oil and European rapeseed futures, added to the declines in canola.
“Everybody is bearish vegoils, and it’s hard for canola to stand in the way of that,” said Bruce Burnett, director of markets and weather information with MarketsFarm.
Chart-based selling contributed to the losses in canola, as speculators have built up a sizeable net short position over the past month.
Read Also
U.S. again halts cattle imports from Mexico over flesh-eating screwworms
The flesh-eating livestock pest New World screwworm has advanced closer to the U.S. border with Mexico, the U.S. Department of Agriculture said, prompting Washington to block imports of Mexican cattle just days after it allowed them to resume at a port of entry in Arizona.
A move below previous support at $710 per tonne in the November contract likely encouraged additional speculative selling, with next support at $700 per tonne having “a bullseye on it for the bears,” according to Burnett.
However, he added, there was no real fundamental reason for canola to move much lower. He noted that while export demand was soft, the harvest is nearly done, and domestic processors were still crushing aggressively.
“I think we’re trying to bottom here more than anything else,” Burnett said.
— Phil Franz-Warkentin is an associate editor/analyst with MarketsFarm in Winnipeg.
