Glacier FarmMedia — The January canola contract on the Intercontinental Exchange has stayed rangebound, between C$630 and C$650 per tonne, since Oct. 27. A Winnipeg-based analyst believes it will stay that way for a little while longer.
Tony Tryhuk of RBC Dominion Securities explained that stability was uncovered in the canola market as the shorts covered their positions and buyers explored the long side.
“That’s been a feature that’s given us support,” said Tryhuk.
He also said there is more optimism among canola growers that a resolution in the trade war between Canada and China is on the horizon. Federal agriculture minister Heath MacDonald told Reuters that talks with officials during his recent weeklong trip to China were constructive.
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Regardless of the United States government shutdown ending soon or not, the Department of Agriculture is set to issue its supply and demand report on Nov. 14. The USDA cancelled its October edition of World Agriculture Supply and Demand Estimates due to the shutdown and pushed back their November report a few days.
“I think that has farmers waiting for (a resolution) to happen, or to see more of a conclusion of what will happen, whether it will proceed or not proceed, before their next round of sales,” Tryhuk said, adding that in the meantime, there is also strong demand from the domestic crush sector.
“We are seeing that, in general, the crush margins are profitable. We don’t ignore the biofuel component. We don’t ignore the soyoil input into the board crush calculations. But as that remains positive, you can expect to see ongoing consistent crusher participation in the market.”
The United States Department of Agriculture will release its World Agricultural Supply and Demand Estimates on Nov. 14 and Tryhuk said more current data could have a spillover effect on canola prices.
“We need that outside influence in order to determine where values are headed and getting some direction from the USDA should help us be in a better position to forecast soybean prices and from that, essentially make a decision where the price of canola is headed,” he explained.
Despite the probable end of the U.S. government shutdown and progress in Canada-China trade relations, he expects canola prices to stay rangebound in the coming days.
“The market has found an equilibrium given the (news) it has to work with. Until you get a new input that will change the outlook, (canola) will trade sideways, for sure,” Tryhuk said.
