CNS Canada — ICE Futures Canada canola contracts are showing signs of wanting to climb higher due to recent moves in soybean oil and the Canadian dollar.

The front-month March contract is still below the benchmark $500 per tonne mark but is starting to creep toward it.

Some of the movement can likely be traced to recent weakness in the U.S. dollar, something one industry-watcher says was bound to happen.

“Trump did say he wanted a weaker U.S. dollar” to make U.S. exports more attractive, said Wayne Palmer of Agri-Trend in Winnipeg.

Farmer selling on the Prairies is slow these days while steady global demand for oilseeds underpins the futures. Basis levels are also seeing some improvement in Western Canada.

The U.S. soyoil market seems to have carved out a bottom for itself after testing seven–month lows. That leads some analysts to think values may have to turn higher.

Resistance is being felt though by the belief that canola is extremely expensive right now compared to other oilseeds.

“Canola is certainly cheaper now than it was a few months ago,” said Ken Ball of PI Financial in Winnipeg. “But from a buyer’s point of view canola is more expensive now than it was then because their margins are sharply lower. That takes away buying power.”

The massive amount of soybean stocks in South America, coupled with what looks to be another big harvest, is another barrier facing prices.

“Argentina is going to have to lose 10 million tonnes of soybeans minimum, because (South American) carryover stocks are just off the charts,” said Ball.

— Dave Sims writes for Commodity News Service Canada, a Glacier FarmMedia company specializing in grain and commodity market reporting. Follow CNS Canada at @CNSCanada on Twitter.