MarketsFarm — ICE canola futures are pretty much back where they were a week ago after losing ground, only to recover by small — and then strong — gains.

The May canola contract finished at $765.20 per tonne on Friday and closed Wednesday at $767.30. In between, the lowest close for May was $735.20. That drop was due to a long liquidation as the March contract wound up most of its trading.

However, the top of the canola market may have already peaked, according to analyst Errol Anderson of ProMarket Communications in Calgary.

Day-to-day movements of canola, and other edible oils, have remained very difficult to predict, he added.

“It can suddenly sprint $10 to $15 higher…it also makes the market vulnerable to those sudden drops as well,” he said.

One factor to keep an eye on, he said, was that soybeans for export out of Brazil are 60 cents per bushel cheaper than those leaving the U.S.

Despite slow progress in the Brazilian soybean harvest, a massive amount is beginning to reach the global market. It remains to be seen as how much of an effect that could have on the CBOT soy complex.

But to Anderson, the key element of the futures isn’t soybeans, but rather corn.

“Corn is the king of the grains. If the corn market starts to crack, then soybeans will crack,” he said.

Anderson pointed out that Chicago corn has been bouncing around either side of US$5.40 per bushel in the May contract, with something needed to give it further direction either way.

That could come next week with the latest supply-and-demand estimates from the U.S. Department of Agriculture. Corn supplies are said to be tight in the U.S. and any reduction in ending stocks could create a bullish market.

If corn remains strong, soybeans will as well — and that in turn will spill over into canola.

— Glen Hallick reports for MarketsFarm from Winnipeg.