The first two weeks of February have seen a steady decline in canola prices, according to Barry Coleman, executive director of the Northern Canola Growers Association. March futures price contracts have now dipped to $471 a ton, which is below the support line of $480. The latest cash prices range from a low of $16.07 to $16.80 on the high side per hundredweight.
“Canola futures had been in a tight range of $480 to $490, but now they are down around the $470 range,” Coleman noted. “And they say domestic crushers and exporters appear to be well covered for their nearby requirements and once it warms up there is a potential for producer deliveries to ramp up, since there usually is a surge in farmer selling prior to the road restrictions coming on.”
The lack of any progress in the China trade talks and improvement in South American crop conditions have had a negative impact on oilseed markets in general, Coleman noted. There has been little positive news in the markets to help offset the downward movement in the markets lately.
“There is also continued talk about concerns of Canada’s canola exports to China and whether there are any political tensions between those two nations that may have stopped China from buying Canadian canola,” Coleman said. “Some are saying imports to China have slowed down, while others say they can see no evidence of that at this time. It will take a few weeks to see whether that is true or not.”
Stronger world veg oil values have enhanced canola crush margins, but that hasn’t done much for canola market prices, he said.
“Supply and demand appear to be in balance for now, and farmer selling is sufficient to saturate export and domestic demand, which has kept the market in a narrow range,” Coleman noted. “All of the marketers say they expect a seasonal rally in late March or April, because the market usually incorporates a minor risk premium until the upcoming production is more certain. That is when a lot of those marketers will be waiting to recommend further sales of canola.”