Canola Price Dip

By Laura Smith

25^th November, 2024

High canola price premiums have been wiped in the past week, with prices dropping more than $50/mt, with the oil seed complex retreating on big gains received for the past month. Canola trading near its peak for the year at $790 track Port Kembla last week, now trading a $736 track. Technical sell offs as funds exit long positions held have contributed to the sudden drop in prices, if funds look to exit further, we could potentially see further falls in grower prices. ICE Canola is currently trading at 2-month lows, this is part is also due to decreased demand and lower comparable oil complex. Brazil and Argentina have had a favourable start to the soybean planting season improving production estimates. 

The weather forecast has certainly been a talking point of late and time will tell what extent the rainfall has had on quality. There had already been reports of wheat showing signs of weather impacts with some SFW segregations being opened in parts of New South Wales. If this is felt more broadly across the regions it would undoubtedly reverse the trend of the good mix of quality grades coming through BHC with ASW1/H2/APW1 all competing for equal dominance. There has been some evidence of frost damage through Southern New South Wales with AGP1 and AUH2 hitting the system.

The wheat market broadly has been reasonably well supported with exporters all vying for position to get their hands on physical tonnes for execution. Whilst the export program isn’t as big as it has been in previous years, the slower pace to grower selling is keeping a bid in the market. There have been some spot opportunities in the domestic market however generally, this market feels reasonably well covered on all grains. These markets have been relatively flat over the last couple of weeks. 

Sorghum markets have been largely flat also however recent rainfall is perhaps starting to bring a few more sellers to market. That market had been thin a sitting around $330 delivered Downs however in recent days has seen volume trading below that level. On paper, if sorghum is to find a home domestically it will need to trade a larger discount to wheat.

In offshore markets it seems the Russian conflict isn’t de-escalating anytime soon. US futures eased on the back of tactical selling, with the advances in attacks limiting losses here. Both supply chains are still actively working on getting grain out of the country, without too much hindering on grain movements so far, however the market is closely watching. Over the weekend the UK and parts of the Russian region received much welcomed rainfall, with the French planting progress now ahead of the five-year average. Us Corn futures have softened, with markets tracking sideways and domestic and export demand is supportive of current prices.