WINNIPEG, Manitoba--As the canola harvest winds down on the Canadian Prairies, prices on the Intercontinental Exchange (ICE) began to climb upward in approaching C$900 per ton, the upper limit of its range. That has given Winnipeg-based analyst Wayne Palmer of Exceed Grain reason to believe canola will bust through C$900 per ton.
"That's all due to the drought and canola is just around the corner from breaking out and I think, taking a moonshot as well," Palmer commented.
"Canola is going to be traded methodically. I think the fireworks are towards the end of October," he added.
Palmer based that on the increases seen on the Chicago Board of Trade (CBOT) during harvest time in the United States. His forecast has been based on yields in the U.S. coming in below average and that end users are buying now rather than waiting until combining is finished.
On top of that, the U.S. dollar has spiked in recent days, which would otherwise push prices downward.
"Everything should be a bearish scenario and not a bullish scenario," he said.
Palmer likened canola to Chicago oats, which were pushing toward US$6 per bushel due to the drought stricken crop providing low yields.
Besides what's been happening at ICE and CBOT, European rapeseed and Malaysian palm oil were hitting new contract highs. That underpinned canola values.
As well, Palmer said "everyone is short" when it comes to their canola.
As October is about to begin, there will soon be movement to roll out of the November contract into January and other positions.
With growing expectations of the canola harvest coming up short of 12.8 million tons forecast by Statistics Canada, the trade will want to move when it can.
Source: Commodity News Service Canada, news@marketsfarm.com
(END) Dow Jones Newswires
09-29-21 1619ET
