Winnipeg, (MarketsFarm) – The ICE futures canola market fell sharply over the last half of January, but have turned the corner during the first few trading days of February.
“I think we have room for some corrective gains,” said MarketsFarm Pro analyst Mike Jubinville on the recovery in canola.
The March contract hit a session low of C$448.50 per tonne on Feb. 3, but bounced higher by the close and continued higher in subsequent days to settle at C$461.70 on Feb. 5.
An overreaction to concerns over the coronavirus outbreak contributed to the declines and also to the eventual move higher, according to Jubinville.
“In the big picture, it changes nothing in the global demand for food,” he added noting that canola, soybeans, and other commodities that were caught up in the sell-off now look like a bargain for end users.
“I think canola will continue to be supported as long as we see these corrections continue in the vegetable oil markets,” said Jubinville. However, he added that the general demand environment out of China does remain uncertain.
Looking at the bigger picture, “throwing aside the dramatic run-up we had in December and the big pullback in January, it’s still a rangebound market – that hasn’t changed,” said Jubinville.