The ICE canola market will bounce around in trade for the foreseeable future with the overall trend being downward, according to an analyst.
“We’re just going to continue to migrate lower. They are going to be up days because nothing goes down forever,” said Wayne Palmer, senior market analyst with Exceed Grain.
Over the last few days the canola market has bounced back and forth, rallying one day to only go down the next. The days when it does go down it falls more than the days when it is higher.
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Farmer selling and weather conditions have been driving the bouncing market.
“We’re going to go lower before we go higher. It’s just a matter of farmers selling and if funds are going to put us down as well because they’re going to add to their short positions,” he said.
The latest data from the Canadian Grain Commission released on Oct. 12 showed strong canola deliveries from farmers. Farmers delivered 584,100 tonnes of canola into commercial positions during the week ended Oct. 7, which was up by about 100,000 tonnes from the previous week. The trend has continued with many deliveries still happening.
“Farmers need to sell, the only reason they didn’t sell is because they still have a majority of the crop out in the field in Alberta and Saskatchewan. And it looks like until the end of October they’re going to be back out there,” Palmer said.
Cold and wet conditions over the last month stalled harvest progress in parts of the Prairies, but with drier weather over the last week and the forecast showing warmer temperatures there has been news that farmers have been able to return to the fields. There is optimism that harvest progress will be made in the upcoming weeks.
Palmer doesn’t expect that we’ll start to see another rally in the market though until at least the end of October or the start of November, due to the delayed harvest.
“It’s going to bounce around, migrate lower, net lower on the way down until the crop is off and the farmer has sold enough grain where he’s going to be cash sufficient until the New Year. They are going to lock the bins and then we’re going to rally,” he said.
