WINNIPEG--A drop in canola prices could be looming, an analyst says, citing undersold market conditions.
Wayne Palmer of Exceed Grain in Winnipeg pointed to Prairie farmers and said, "I think they are undersold."
Too many farmers have held off from selling their canola in hopes of getting a great price the next time it goes up, he said.
"There may not be a next time we get $900 per ton for November canola," Mr. Palmer said.
Farmers are likely angry that they didn't sell for C$25 to C$30 per bushel, he said, and it is now very likely they won't get anything over C$20 a bushel.
With a massive long position still lurking in the canola market, Mr. Palmer stressed prices could easily tumble as harvest approaches. The situation could turn into one where farmers and the funds are attempting to sell their canola at the same time.
Buyers from China bought canola before the extremely sharp price increases the market witnessed over the last year or so.
The analyst noted growing conditions and the weather continue to be quite good across the region, something that will also weigh on prices barring some sort to catastrophic weather event.
Other than that, Mr. Palmer said canola will continue to follow the path set by soyoil at the Chicago Board of Trade.
Source: Commodity News Service Canada, news@marketsfarm.com
(END) Dow Jones Newswires
08-17-22 1703ET
