Glacier FarmMedia—After incurring sharp losses on Tuesday and Wednesday, canola futures on the Intercontinental Exchange were poised for a turnaround to swing higher. MarketsFarm analyst Mike Jubinville suggested that cash prices on the Canadian Prairies should soon return to C$14 per bushel and maybe push as high as C$15.
Jubinville made the comments during the MarketsFarm webinar on Wednesday, ‘the Long and Short on Markets.’
“It’s premature to say we are outright bullish, but we’re not bearish. We are presently sideways,” he stated.
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One element that could help canola turn around are export sales to China. While reliable customers such as Japan turn to other sources for canola, Australia being one, Jubinville said China has been ramping up its purchases.
Another element has been the increased domestic crush, due to expansion in the renewable diesel industry. Jubinville noted the crush is running near or at full capacity, with some crushers set to expand their operations.
As well, commercial buying to fulfill these orders would encourage Prairie farmers to empty out more of their grain bins ahead of spring planting. One issue being that becoming farmer selling as more producers rush to get their canola into the commercial pipeline.
Also on the negative side, Canada could see its canola ending stocks increase despite recent stronger demand. Jubinville surmised the carryover could reach as much as 2.4 million tonnes for 2023/24, but it’s more likely to come in lower.
However, as spring approaches canola prices more often than not climb higher, with some of the best prices of the year being offered, Jubinville stressed.
One factor still pending at the time of writing was the prospective plantings report from the United States Department of Agriculture, set for Mar. 28. How the USDA’s forecast on soybean acres shakes out would go some length in guiding its path on the Chicago Board of Trade.
With that in mind, the average trade guess placed 2024/25 planted soybean acres at 86.7 million. While that’s under the 87.5 million acres projected at the USDA’s Outlook Forum last month, it’s more than the 83.6 million that were seeded a year ago.
Any significant increase in those acres could weigh on soybean values and in turn, put pressure on canola.
— Glen Hallick reports for MarketsFarm from Winnipeg.
