ICE Futures Canada canola futures moved sharply lower during the week ended Wednesday, with a large portion of the declines linked to the speculative sell-off seen Tuesday.
Speculative money was said to be moving out of oilseed markets, including canola and soybeans, and into equities. This had a bigger impact on canola than beans because “canola is such a small market compared to soy,” said Ken Ball of PI Financial in Winnipeg.
The sharp downward movement on Tuesday helped to turn the bias in canola lower, meaning there is more room to the downside, he said.
“That doesn’t mean we’re going to go down a long way right away, but it probably does turn the focus of the market a bit lower now.”
Canola could still find some support from the late seeding of crops in Western Canada, as there are still problems in some regions.
“The eastern Prairies are seeing some pretty large pockets that are struggling” with seeding, Ball added.
Forecasts call for more beneficial weather through to the first week of June, which should allow for most of the canola crops to be seeded. But there may still be some acres which could be left unseeded.
“We’re certainly going to have some unseeded acres, but it may actually be fewer unseeded acres than we had last year and the year before,” said Ball.
If the forecasts change and more rain is seen, even fewer acres will be seeded, which would be supportive for canola.
But it’s going to be hard for the problems in Western Canada to have an impact on prices because spring soybean planting in the U.S. is going “almost perfectly,” said Ball.
— Terryn Shiells writes for Commodity News Service Canada, a Winnipeg company specializing in grain and commodity market reporting.