Sales of canola out of the world’s top canola-exporting country are moving slower than merchants had anticipated — and market watchers attribute Canada’s sluggish pace to high prices and low global demand.
“The export story right now is quiet,” said Peter Schutz, canola merchant at Richardson International, attributing it to a lack of demand and poor crush margins.
The crush margin for the nearby November contract works out to $38.73, as of Friday, compared with $87.96 in the same time frame the year prior, according to ICE Futures Canada’s Canola Board Crush Margin.
Export interest has tapered off lately due to high prices, said Ken Ball, trader at PI Financial.
Canola futures in the November contract closed Monday at $468 per tonne.
“Buyers aren’t going to be eager to pay that price for canola,” Ball said. “It’s a little bit too expensive.”
Schutz said China has backed away from the market slightly, despite subsidy changes within the country.
China has taken away price support to canola-growing farmers; however, those changes came after this year’s crops were planted.
That means heightened exports to China likely won’t occur until next year.
Source : AlbertaWheat