It has been another whip-saw market period in recent weeks, according to Barry Coleman, executive director of the Northern Canola Growers Association.
“We were wondering if the January canola futures were attempting an upside breakout above the chart resistance of $465, and just like that, we are down at range lows of $457 a ton,” Coleman said. “They said in Canada the prices were pressured by the week-long rail strike in that country, but there is news now that the strike has been resolved.
“It seems like the canola futures have taken the bearish que from soybeans as the January contract has lost quite a bit – even news of the end of the rail strike in Canada didn’t seem to do much for the market,” Coleman added.
The canola cash prices at local crushing plants ranged from a high of $15.69 to a low of $14.59 per hundredweight, which also showed slight weakness.
There has been good export news from both sides of Canada recently, says Coleman. From the west coast ports, 265,000 tons were shipped, and 122,000 tons were shipped from the St. Lawrence terminal on the east side of the country.
“This eastern volume of canola that was shipped almost doubled the volume shipped last year and could indicate a continued increase in volume destined for Europe,” Coleman said. “That is good news is we see more canola going to Europe, but it isn’t making up totally for the Chinese market that was lost, but it’s filling the gap somewhat.”
Exports are a modest 75,000 tons ahead of the steady pace that is needed to meet the predicted total of 9.2 million tons.
The domestic crush in Canada now stands at 3.1 million tons for this crop year, compared to 2.4 million tons a year ago at this time. However, crush figures in the U.S. are at about 90 percent of last year’s level.
Canola prices are related to the global oilseed prices and it was discovered that the Malaysian palm oil stocks were down more than the trade expected. The main reason for the higher disappearance is increased shipments to China.
China is using more vegetable oils because there is less hogs being slaughtered in the country and they are using vegetable oils to make up for some of that, Coleman noted.
“We heard the palm oil prices have retreated from their recent increase and there is also concerns about India maybe slapping a tax on palm oil shipped into that country, which would be negative toward all vegetable oils,” he said. “It is kind of a whip-sawing of the market that has been going on.”