Ample canola supplies in the commercial system seem to be weighing on the market, according to Barry Coleman, executive director of the Northern Canola Growers Association. In addition, concern remained for Chinese demand for Canadian canola due to the ongoing dispute that is going on between those two countries.
“Exports are still a little sluggish from last year and that also is weighing on prices,” Coleman said. “However the recent cold weather and the resulting slowdown in farmer deliveries is providing some support for the market.”
Another plus for the canola market is the fact that Malaysian palm oil futures have climbed to a three-month high, which is a help to all global veg oil markets, including canola. This is due to a growing worldwide demand for veg oil.
There is still uncertainty between the U.S. and China regarding the trading relationship between the two nations.
“There was news last week that talks were going well, and then later there were reports that those talks were not going that well,” Coleman noted. “That ongoing concern is certainly impacting canola exports. The latest Canadian Grain Commission data shows that Canadian exports of canola are 4.6 million tons, which is down from 5 million tons at this time last year. That drag on the Canadian export market is affecting the North American market.
“A lot of those in the market thought that there would be increased canola exports to China to make up for some of the reduction in soybeans from the U.S., but that hasn’t shown up yet. The incident with the Huawei CFO official puts a wrinkle in the whole thing.”
The March canola futures are at $483 a ton and new crop November futures are at $497. The March canola contracts have been trading in a range of $480 to $494 for quite some time now, according to Coleman, which indicates canola is in a sideways market.
Local cash prices range from $16.33 per hundredweight to $16.97, and the cash prices have come up in recent weeks, he noted.
Finally, the annual Crop Production Report didn’t come out from USDA last week, due to the partial government shutdown, Coleman noted. Some in the industry are saying that the lack of marketing news may be suppressing prices. Some of the big speculators in the market aren’t willing to take a position because of the lack of market news risk.