WINNIPEG, Manitoba--While recent gains in canola on the Intercontinental Exchange were likely generated by spread trades, the market will probably become choppy, a trader said.
"Spreaders for the last few days have been selling canola and buying soyoil," said Ken Ball, a trader with PI Financial in Winnipeg, on Wednesday, noting canola lost between 60 Canadian dollars to C$70 per metric ton prior to the latest turnaround.
While it is uncertain as to how long canola could be on the upswing, Ball said he expected it to last at least two to three days.
"Meanwhile, crush margins are oscillating wildly ... which must drive the packers nuts," he said.
It is hard to tell who exactly is behind the upward shift in canola, Ball said, but it might be some of the packers.
Rain across most of the Prairies during mid-July brought some relief to struggling crops, although some areas of the region missed out while other parts have received too much, the trader said.
"I would say overall canola has improved considerably in many areas, but not in all."
As several of the grains and oilseeds made modest to sharp gains recently, with some trimming back, Ball said the markets will now pause to see how the crop finishes developing.
"Then they'll make their move from there," Ball said of the trade.
He also said the next supply and demand estimates from the U.S. Agriculture Department need to be watched closely, "it's going to be a big one.
"The markets are not sure if the USDA is going to deal with the acreage issue or not," Ball said.
The June report placed planted soybean acres in the U.S. at 87.5 million, while the July report cut that down to 83.5 million. Corn acres were increased from June's 92.0 million to 94.1 million.
"And it's the first full surveyed yield for the corn and soybean crops," Ball added.
The USDA is scheduled to publish its supply and demand report on Aug. 11 at noon EDT.
Source: MarketsFarm, news@marketsfarm.com
(END) Dow Jones Newswires
07-26-23 1726ET
