Canola futures on the ICE platform moved higher during the week ended Dec. 6, as the market corrected off of the lows hit in late November. Gains in Chicago Board of Trade soybeans and a smaller 2018 Canadian canola crop contributed to the advances, although values may not have much more room to the upside, according to an analyst.
Canola “can maybe bubble up a bit, but it won’t hold,” said Errol Anderson, of ProMarket Communications in Calgary. He said the CBOT soybean market was looking like it could turn lower, which would weigh on canola.
“This arrest thing just ratcheted this whole thing up,” said Anderson, referring to the arrest of Meng Wanzhou, a top executive with Chinese technology company Huawei and daughter of the company’s founder, by Canadian authorities at the request of the U.S. The arrest was linked to U.S. sanctions against Iran and is seen as threatening the tentative trade truce between the U.S. and China.
While the tentative trade truce between the U.S. and China at the G20 summit in Argentina brought some optimism to the soybean market, no actual soybean business was reported and the arrest news was seen as bearish for commodity prices.
The looming South American soybean crops are another bearish influence in the background, and Anderson recommended that canola farmers take advantage of pricing opportunities when they arise rather than hold on.
He said canola likely had another C$20 to the downside, noting that “the world doesn’t care about the cost of production.”