Plunging Palm Oil

[malleefarmer]

Have to say not a truer word spoken.

Dont matter if its wheat wool lamb oil if there aint demand supply side of argument means zit.

[Guest]

An opinion, but I have seen this type of market action in my career many times as a trader.

When a bull market eventually goes into a dive, emotion runs high. We have all heard this before . . . the greed, hope, fear, panic cycle of a market. Market emotion drives this. We are all human.

Long liquidation triggers as calls for cash (margin calls) force selling. But remember the specs in the market classically drive prices too high in a bull market. They can also provide a grower better-than-expected returns through heated bull markets.

Once this selling exhausts itself, a market may correct itself technically rebounding between 50 to 66% of the drop. Smoke and mirrors you say . . . . But for the market to actually flare to new highs once again takes a tankful of fresh bullish gas (news) to achieve. This is not impossible, but rare.

But you say . . . there is little canola left in the bin. True. But demand is king in any commodity market, not supply. Supply can be dead tight into crop year end, but if demand fades, prices can still drop.

The key straight ahead is the health of demand . . . and the new factor on-the-watch will be spring/summer weather.

In other words, we are likely to continue to see price volatility. All the best in your marketing.

agreed , there is a limit to everything
this could be the downslope
but looking at drought map its not hard to see why farmers are reluctant to sign the one sided contracts

[jazz]

An opinion, but I have seen this type of market action in my career many times as a trader.

I remember working in calgary in 2008 during the great recession. Everything literally dropped overnight. My office mates literally calculated they needed to work an extra 10 yrs to make up what they had put away up until then.

It can drop that fast, but IMHO we are still early in the game. Bidens treasury pick is Old Yellen and she said today to run the presses as fast as they need to be.

I dont think we can crash until the stimulus has run its course or ran into headwinds with the dollar and bonds. I think thats a little ways off yet.

I would be worried more about canada. An economy the size of Texas and smaller than California with $1.3T in total fed gov debt obligations is really playing with fire.

[malleefarmer]

A canola market commentator here said last week “the strongest correlation in hole commodity index is between palm oil and canola bar none” “ rarely do they go in opposite directions forvto long before one corrects to meet the other be it up or down history has shown palm oil is king”

[AlbertaFarmer5]

I've tried to follow the corellation between palm oil or soybean oil and canola.
Soybean oil has a very distinct top at this time of year almost every year. Canola, locally has a seasonal peak in early summer most years, almost competely out of sync on an seasonal basis.

[malleefarmer]

Im a mere minnow compared to you guys my total canola tonnes are 250 to 350 tonnes per year.

Dont know the intricacies of the market.

It peaks in australia every year late oct to early dec.

Sell thats it.

If i grew thousands of tonnes like you guys i would study it more.

[errolanderson]

Grains getting taken to the back-of-the-woodshed today.

EU economic data getting worse . . . talk of record Brazil soy production on improved rain . . . China finds ASF again in hogs impacting corn . . . crude oil stumbles . . . loonie selling off. Commodity sell-off now becoming more broad-based (IMO).

New crop canola has been the superstar this week along with premium flax bids. Barley / feed wheat bids remain strong . . . but cracks appear showing along-the-sidelines.

[TASFarms]

I find it hard to believe you can go from drought to record size. Nothing grows good after it’s been stressed bad. Still not enough soys to go around

[errolanderson]

I find it hard to believe you can go from drought to record size. Nothing grows good after it’s been stressed bad. Still not enough soys to go around

Bloated fund long positions are getting liquidated enmass today . . . . we have to see if China buyer is still in-the-market after sell-off subsidies.

[Jordy2323]

Continued strong sales. This drop now could be a buying opportunity, or is it a trend?

(Washington, D.C.) -- The US Export Sales Report for the week ending January 14th shows solid sales for corn, soybeans, wheat, soybean meal, and soybean oil.

Allendale commodities broker Greg McBride says total corn exports on the weekly report were 1.484 million metric tons, soybeans were 2.648 million metric tons, soybean meal was at 468,500 metric tons, and soybean oil was 52,300 metric tons. Those figures had a bullish tone. The wheat exports were also good at 329,600 metric tons, falling within the range of estimates.