WINNIPEG, Manitoba--A speculative selloff weighed heavily on the ICE Futures canola market during the week ended Jan. 19, before the selling subsided and prices regained much of their lost ground.
"For prices this high, that's pretty routine stuff," said Ken Ball of PI Financial in Winnipeg on the C$80-per-ton drop in the nearby March contract and subsequent C$40 bounce off of the lows.
He expected that canola may not have much more room to go higher in the current environment, with speculative positioning within a wide C$60- to C$70-per-ton range likely to be the feature over the next few months.
"Unless we get an explosion in the soy market, old crop canola is likely pushing the upper limits of its range," said Ball, adding that while new highs are unlikely, "Speculators can still jam it up and down."
With North America still some time away from seeding the 2022 crop, attention in the market is focused on South American production. Recent rains help alleviate some of the dryness concerns in Argentina and Brazil, but "there's still some nervousness about South America in the air," said Ball.
Ongoing strength in Malaysian palm oil, which was trading at fresh highs this week, was also supportive for vegetable oil markets in general.
Activity in the new crop canola contracts has been much more subdued, with prices described as "comfortably valued" by Ball.
Looking ahead, "Even if we have a good crop next year, supplies will still be tight," said Ball, noting that even with a bumper crop new crop prices will need to stay historically strong.
Source: Commodity News Service Canada, news@marketsfarm.com
(END) Dow Jones Newswires
01-19-22 1702ET
