The agricultural futures markets have become extremely 'emotional' over the past week. Daily price ranges in grain and oilseeds futures have been extreme, it would appear markets are dominated by funds placing orders automatically, based on headlines.
Canola market suffered a dramatic price decline over the past two weeks which has surprised many analysts.
Traders have attributed the rapid decline to
A) larger than expected crop in Ukraine and Australia
B) slower biodiesel demand in the EU and
C) funds reversing long positions and going short.
The sharply lower price for canola is likely to lead in a reduction in area planted to the oilseed, with farmers on the mainland switching to cereals.
While the forecast for precipitation this week looks good, traders will be watching for clear signs of an El Niño with the SOI entering negative territory.