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Canola Headed for $360...

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    #25
    I'm not going to guess how far canola will decline but $230 does seem excessive. The part of the equation from a fundamental standpoint is a better understanding of world vegoil prices and where the cross over occurs when more biofuel has a better fit/increases blend with crude oil. This to me means more watching geo political factors and black swan events (unknowns that can't be planned for).

    One thing that its talked about so far is canola quality and how this will fit into the equation. Demand for the most part is No. 1 canola with a tolerance for 2. Not second guessing but the amount of 3's and sample on account green seed will be important to the market. How the market deals with this and discount structure will be things to watch.

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      #26
      The Canadian canola supply demand will be much tighter this year. Will let others scrap over exact numbers but likely about 16 to 17 MMT combined carryin and production. Core customer (domestic crusher, Japan, US and Mexico) in the 11 to 12 MMT area. That leaves China and other more price sensitive markets for an additional 4 MMT. How much is sold to China this fall will be interesting. Once canola is sold and leaves the country, it doesn't come back.

      Will be a year that drives farmers but a very interesting one for market followers. I suspect will provide some interesting opportunities for people who trade the market.

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        #27
        We also have transportation regulation that highlights volume at least to November. Canola is the easiest of any of the crops to move big volumes. Wheat is a crop that has big but the dogs breakfast of grades and quality characteristics is going to create a real challenge about what is loaded in the country and what is sold/delivered at port. Don't know how this will be resolved in the performance system that highlights volume. Hopefully blending by everyone including farmers to lowest common denominator in terms of grade isn't 100 % the answer. Quality still counts so there is still need to segregate.

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          #28
          http://www.bloomberg.com/news/2014-09-20/global-finance-chiefs-said-to-warn-of-mounting-economic-risks.html

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