WINNIPEG, Manitoba--At least for the foreseeable future, canola on the Intercontinental Exchange (ICE) is likely to remain range bound, according to analyst David Derwin of PI Financial in Winnipeg.
Derwin said the November canola contract has support at C$850 per ton and when it bumps up to around C$900 it's quickly pulled back.
"Sideways is not very exciting, but that's what we are going to see," he said.
Canola had been slipping back until Statistics Canada released its updated production numbers on Sept. 14. In the report, 2021/22 production of the Canadian oilseed was cut from 14.7 million to now 12.8 million.
However, there have been several indications from the trade that canola should have been cut further, perhaps by another one million tons. That has been based on the differences between the canola yields reported by the Prairie Provinces and the slightly higher yields estimated by Statistics Canada.
Furthermore, the federal agency won't issue another production report until December, leaving the trade to piece together the puzzle on its own.
Derwin noted that a good amount of canola this year has been pre-sold, leaving very little for farmers to sell "straight off the combine" to elevators or crushers.
Since canola is well entrenched in the movement of soyoil on the Chicago Board of Trade (CBOT), and Malaysian palm oil, Derwin said both have been range bound as well. That in turn leaves canola very little room to maneuver outside its own range.
Source: Commodity News Service Canada, email@example.com
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