WINNIPEG--With so many influences affecting canola prices on the Intercontinental Exchange, one trader said it is hard to figure just where the Canadian oilseed will go. However, another trader said the days of canola fetching more than C$1,000 per metric ton for an extended period of time are pretty much over.
"It's probably the craziest period we ever have ever seen after last year's action," said Ken Ball of PI Financial in Winnipeg, Man. He cited the tensions between Russia and Ukraine over the former's threat of war, financial uncertainty, wild gyrations in the stock markets, and differing expectations towards interest rates.
Although the liquidation of old-crop canola continued this week, particularly with the nearby March contract, Ball stressed there wasn't an avalanche of traders rolling out of old crop.
"Canola is still in the stratosphere. Eventually funds and spec traders analyzing their positions will start selling out of ones in the stratosphere and find something a little more moderately priced to buy and hold," he explained.
Ball pointed to the veg oil market as a whole, noting it still has strong support that can spill over to canola. Meanwhile, new-crop November canola will follow Chicago soyoil and soymeal values.
"The 'Nov' canola will trade as a crush item. Once we get into April and things are looking pretty testy on the Prairies, it might start trading differently," he said.
To Winnipeg-based trader and farmer Bill Craddock the specs are determined to get out of their old-crop positions, realizing they won't push above C$1,000 per metric ton. In turn, that has resulted in the spreads narrowing.
"I think we're going to see this continue, where the deferred comes up. They've probably done all of the rationing they feel is needed on the nearby," he said.
Craddock added that the specs have begun to focus on the new crop, driving it higher, while pulling down the old-crop positions.
Source: Commodity News Service Canada, news@marketsfarm.com
(END) Dow Jones Newswires
01-26-22 1549ET
