ICE weekly outlook: Canola futures bend under pressure

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Published: December 16, 2021

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ICE March 2022 canola (candlesticks) with Bollinger bands (20,2). (Barchart)

MarketsFarm — As the speculative longs for ICE Futures canola keep trying to defend their position, trader Ken Ball of PI Financial in Winnipeg said the pressure on canola continued to build.

That’s especially so with declines over the last few weeks in Chicago soyoil, Malaysian palm oil and European rapeseed, he said.

“No one is really interested in buying canola at these prices. It’s ludicrously overvalued,” Ball said.

Spec longs are hoping there will be a break in the vegetable oil market, in which prices would then climb higher and allow those specs to hang onto their canola contracts, he said.

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“There’s definitely a trigger point where these guys have to get their money out of here,” he stressed, adding prices could easily tumble by $50-$70 per tonne very quickly.

“The massive long position continues to build. It’s extremely vulnerable to a really severe collapse. Unless [the specs] have enough money, saying we’re not letting it go.”

Other than the spec longs, Ball said no one else is buying canola, including the commercials. Crushers are now net sellers and export sales are near zero, he said.

“It’s bending, but it’s not breaking.”

Canola futures could plummet by $100 per tonne and still be doing an effective job in rationing demand, he estimated.

— Glen Hallick reports for MarketsFarm from Winnipeg.

About the author

Glen Hallick

Glen Hallick

Reporter

Glen Hallick grew up in rural Manitoba near Starbuck, where his family farmed. Glen has a degree in political studies from the University of Manitoba and studied creative communications at Red River College. Before joining Glacier FarmMedia, Glen was an award-winning reporter and editor with several community newspapers and group editor for the Interlake Publishing Group. Glen is an avid history buff and enjoys following politics.

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