The general uptrend remains intact for canola despite a recent minor correction as speculators booked profits on some of their long positions.
While bouts of consolidation were not unexpected, "the trends are still upward and pointing higher," said David Derwin, a commodities investment advisor with PI Financial in Winnipeg. "One thousand dollars is a nice big round number that will act like a magnet from both sides," he said.
The January contract settled at $1,010.70/tonne on Dec. 8, while March canola was at $982.80.
Losses in Chicago Board of Trade soyoil futures pulled canola away from its highs over the past week, but Derwin said he expects the Canadian oilseed to remain stronger relative to other vegetable oils due to its own supportive fundamentals. Last week, Statistics Canada’s final crop production report for the 2021 growing season lowered canola production by about 200,000 tonnes from the agency’s September estimate, taking it down to 12.6 million tonnes – more than 35% below a year earlier.
"Canola is in a world of its own," Derwin said. “We have very tight stocks. . . and unless we have very good yields and growing conditions, it will still be tight (in 2022/23)."
With prices as high as they are, Derwin noted that canola could still see large price swings without influencing the overall uptrend.
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