WINNIPEG – The ICE canola futures market has hit the winter lull and there isn’t much driving it, according to one trader.
“The meal has been a leader to the upside, so that again should help crush margins and it has helped crush margins. But trade has been lackluster and I expect that to continue here,” said Keith Ferley of RBC Dominion Securities in Winnipeg, Man.
While the Chicago Board of Trade soy complex has been on the upswing due to positive news about trade talks between the United States and China. Canola hasn’t been able to find support from soy.
The price of canola has been weakening for the last week as the Canadian dollar has climbed above the 75 U.S. cent mark, which Ferley said should have stirred up interest for canola exports.
“We’ve had a nice sell-off here. Market continues to come down and we should be attracting buyers other than just routine stuff. So we’re lacking that interest,” he said.
Ferley suspects something has thrown off interest in Canadian canola. It could be fallout from the arrest of Huawei Chief Financial Officer Meng Wanzhou before last year and China “thumbing their nose” their nose at Canada because of it, Ferley said.
The oilseed markets have also been seeing a bounce due to reports of dryness in Brazil and too much precipitation in Argentina. But Ferley said the market needs to see more proof of the damage to the South American soy crops. However, due to ongoing partial government shutdown in the U.S. there aren’t any reports from the U.S. Department of Agriculture to show the full extent of what is happening in South America.
“That keeps us, if anything, kind of just chopping around in choppy action here,” he said.
On the Prairies there has also increased farmer deliveries due to a snap of warm weather, but the shift back to cooler temperatures is going to put a stop to that.
“We’re bouncing around here (for temperatures) over the next little while. So that may deter some deliveries…so unfortunately winter duldrums is the heading I would use,” Ferley said.