There’s a superhero who can make your crops instantly worth more money!!!!!
He’s Canuckbuck, and in the last few weeks he’s added about $25 per tonne to the value of a tonne of canola.
The efforts of Canuckbuck have obscured a different market phenomenon, one that is not as good for farmers:
“Canola has lagged the soy markets notably,” trader Ken Ball of Union Securities told me this afternoon.
There’s been a rally on the charts in canola since early December. Go to this address below and click on the three month timing for the chart from the Winnipeg exchange:Â
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Prices had been softening for most of the previous month, but heading into the Labour Day long weekend, the price drops were startling.
https://www.theice.com/productguide/productDetails.action?specId=251
But if you compare it to soybeans, which you can do at www.cbot.com, you’ll see that it’s merely echoing the soybean surge, and if you took out the $25 per tonne that Ball thinks the sliding Canuckbuck has done for canola futures prices, canola doesn’t look impressive at all.
“It’s 90 percent just the Canadian dollar,” said Ball.
The good thing about canola being relatively cheaper compared to soybeans is that its cheapness is helping move it out of Western Canada, where there are immense mountains of the stuff leftover from the gigantic harvest a few months back. That crop needs to get out of the system before canola can move into any bull market of its own making, and that will take a long time to happen.
There’s been good canola flow recently.
“It’s relatively cheap. It’s a fairly tempting price for an end user. Business seems to be fairly solid,” said Ball.
For now Canuckbuck is coating canola prices with sugar, making them easier for farmers to swallow, but eventually he’ll probably fly away higher, that sugarcoating will come off, and farmers should hope that most of the excess crop is gone when it does.
