Canola carryout a "wet blanket" over a grinding, sideways market

While harvest delays and yield challenges might typically support a commodity’s price in the markets, Canadian canola has a bigger issue – its large carryout.

“It just hangs over like a wet blanket, and it’s something we’ve known was coming, and yet it creates a whole market situation where things just really feel like a grind, and that’s really what it’s been,” says Jonathon Driedger, of Leftfield Commodity Research.

Reflecting the continued trade challenges with China, canola is seeing a rather sideways trading trendline, and Driedger thinks that will continue.

“We seem to be finding some support around that 440-ish range,” says Driedger. “As long as we have this big carryout and the bulk of this crop comes off, I’m not sure what the incentive is to rally much above that [450], barring some type of a shock…”

As for any chance on seeing China forego the rules long enough to order a significant amount of canola, Driedger isn’t counting on it.

“I’m not that optimistic,” says Driedger, adding moves like that of tariff-free soybeans in the U.S. tend to be part of a much larger geo-political back-and-forth.

“Probably from a strategic perspective, I think China kind of wants to keep the boot on our throat a little bit, and continue to send that message, and along the way probably kind of scoop up the volumes they need in a quieter fashion…”

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