MarketsFarm — The ICE Futures canola market posted solid gains during the week ended Wednesday, hitting fresh contract highs in many months.
The most active May contract hit a session high of $1,143.70 per tonne on Wednesday, but settled off that mark at $1,125.20 per tonne.
While canola may be trading in uncharted territory, there could still be more room to the upside as the Canadian oilseed remains underpriced compared to other markets.
“Drought has reduced the crop size, so we’re going higher… nothing’s changed,” said Jamie Wilton, commodity futures specialist with RJ O’Brien in Winnipeg.
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Canola was at a “deep discount” relative to European rapeseed futures, which would be supportive for canola as the spreads move back to more traditional levels, he said.
Strength in Malaysian palm oil was also lending support to canola, and Wilton expected the Canadian oilseed would keep going higher until demand is rationed.
The conflict in Ukraine is adding an extra layer of uncertainty to futures markets, with the large price swings in wheat over the past week highlighting how quickly canola could also retreat from its own highs.
— Phil Franz-Warkentin reports for MarketsFarm from Winnipeg.
