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ICE weekly outlook: Canola looks to soyoil wildcard

CNS Canada –– ICE Futures Canada canola bounced around within a rather wide range over the course of the week ended Wednesday, but could head higher if it gets help from U.S. soyoil.

“The wildcard here is the (soy)bean oil market,” said Ken Ball of PI Financial in Winnipeg.

While Chicago Board of Trade soyoil futures also saw some wide price moves over the course of the week, he said there were a number of factors pointing to possible strength in that market.

The soybean oil situation “is one of the few ag markets where the outlook is looking interesting,” said Ball.

Tightening U.S. soyoil stocks, lower vegetable oil yields in this year’s U.S. soybean crop, stability in U.S. biofuels policy, and proposed tariffs on biodiesel from Argentina and Indonesia all bode well for soyoil prices, he said.

Ball expected biodiesel tariffs in particular would lead to increased demand for soybean oil from the U.S. biodiesel sector, with canola filling in the human consumption market.

“The limiting function at the moment at palm oil, which has been relatively weak,” he said.

Canola, without spillover strength from soyoil, is “pushing its upper limits for the time being,” according to Ball.

He described nearby supplies as “comfortable” and expected grain companies would continue to provide basis specials in the country to keep canola moving rather than bid up the futures if they need deliveries.

— Phil Franz-Warkentin writes for Commodity News Service Canada, a Glacier FarmMedia company specializing in grain and commodity market reporting.

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