WINNIPEG, Manitoba--A month-long decline of canola prices on the Intercontinental Exchange (ICE), which saw the oilseed lose C$110 per ton, came to an end and was followed by a bounce-back.
While the price of the November canola contract still declined by C$10/ton to $726.10 during the week ended Sept. 27, it hit its lowest price since the end of June at C$710/ton on Sept. 26. before making its way back up.
Ken Ball, a trader for Winnipeg-based PI Financial, said canola had been oversold in recent weeks, pressured by the ongoing harvest.
"There's a lot of harvest selling going on, that's been a part of it," Ball said. "(Traders) have been working with spreads a bit, keeping canola under pressure. But once (soyoil) starts to go up, canola does better and it was due for a bounce. The shorts can only push (canola) down so far before it becomes attractive to buy."
Ball added that biofuel usage is currently strong, which may lift prices for soyoil and soybeans. Diesel prices also remain elevated, supporting soyoil prices.
"I imagine that soyoil has the potential to stay at least reasonably firm to support canola more," he predicted.
Combining operations across the Prairies are progressing at a brisk pace due to warmer weather and a relative lack of precipitation in most areas. In Manitoba, the overall harvest was 76% complete, 12 points above the five-year average, with 78% of the province's canola off the fields. However, Ball stated that the canola harvest is ongoing and wetter areas such as northern Alberta still have lots of crop to come off the fields.
"Harvest is going very slow in some areas...but yields managed to percolate higher in the latter part of August and into September with some late moisture. I've got clients who only started their harvest over the last week or so," he said. "Harvest pressure is abating a bit, but yields are coming on very strong in parts of the country. Much better than expected.
"Harvest pressure should slow down in about a week or two."
Soyoil stocks could be further reduced in an already tight situation, according to Ball, if biofuel usage continues at its current rate. Should that happen, canola prices could continue to rise.
"(Soybeans) might get tight for food usage. Right now, we're looking for a routine rebound of C$30 to C$40/ton (for canola). Maybe a little more, up to C$50," he said, adding that South American weather could also emerge as a factor.
Source: Commodity News Service Canada, news@marketsfarm.com
(END) Dow Jones Newswires
09-27-23 1826ET
