WINNIPEG–ICE futures canola contracts retreated from nearby highs in the week ended Wednesday, but historically high squeeze margins should continue to support the market well going forward.
“Crush margins are unsustainably high,” said Ken Ball of PI Financial in Winnipeg, pointing to margins currently over CAD$200 per tonne over nearby futures.
“Canola should be more stable than the soybean market, although that means [prices] It’s hard to say whether it will increase or not,” Mr. Ball said. He expected the margin to drop to C$150-C$200 per ton over the next few months.
A reduction in crush margins would come from higher canola prices, but could also occur if canola remains stable while product values fall.
“There’s no reason to expect much upside in canola,” Mr. Ball said, noting that prices are still at historically high levels. “It wouldn’t be a shock to see C$900 [per ton] rap if [soybean] Oil can stay where it is.”
However, the lack of dramatic oilseed shortages around the world may limit upside potential. External influences, such as the ongoing war in Ukraine, could also affect the futures markets, according to Mr. Ball.
Source: Commodity News Service Canada, [email protected]
(ENDS) Dow Jones Newswires
10-12-22 1655ET
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