By Dave Sims, Commodity News Service Canada
WINNIPEG, Feb. 17 (CNS Canada) – ICE Futures Canada canola contracts posted small gains during a choppy trading week ended Feb. 17.
Values were under pressure from the start due to a sharp break below major chart support on Feb. 9.
Expectations of a large soybean crop from South America along with the strengthening Canadian dollar put pressure on canola through the week.
One analyst noted that the weaker price was also keeping most farmers on the sidelines.
“The only farmer selling you have now is some farmers who are cash poor or who need money for chemicals or who are going away until seeding,” said Wayne Palmer of Agri-Trend Marketing in Winnipeg, Man.
He said canola might be able to make a run higher if soybeans could claw their way back to $9 a bushel, “but it would be the funds that would need to do that,” he said.
On the bullish side of things, Malaysian palm oil stockpiles dropped to their lowest levels since July. El Nino has cut into production and reduced yields in Malaysia and Indonesia.
Palmer said this could help canola as regular customers of palm oil, like China, may be forced to shop for different supplies.
However, Palmer says the canola market is mainly driven by technical factors right now and shaped by the action of the Canadian dollar.
“Three weeks ago we were at a 68 cent dollar (relative to the US dollar), not a 73 cent dollar. The end user says, ‘I’m not paying these kind of prices because your canola has gotten too expensive,’” he said.
He believes large funds are also poised to sell more before they start buying any of their positions back.
“Commodity fund selling has put us here, they’ve gone from a zero position to being short about 15,000 contracts,” he said.
