CNS Canada –– Canola contracts on the ICE Futures Canada trading platform moved higher during the week ended Wednesday, with old-crop values seeing the sharpest gains.
A combination of speculative and commercial buying interest, as old-crop canola remains cheap compared to other oilseeds, helped nearby futures move higher than new-crop values, analysts said.
The more deferred contracts were also firm, with concerns about the late spring causing planting delays in Western Canada providing support.
The price strength was also linked to seasonal price movement, as the market tends to move higher through May, until the middle of June, said Mike Jubinville of ProFarmer Canada.
But the rally may run out of gas soon, he added.
“If by the end of the month canola looks likes it’s getting into the ground in reasonable fashion, and growers can turn their attention back to marketing, this may be a short-lived event,” he said.
The burdensome Canadian canola supply situation, and continued expectations that carryout stocks will be more than three million tonnes this year, will keep a cap on any gains going forward.
Even though canola is attractive to foreign buyers, which is supportive for the market, the industry doesn’t have the ability to fill a lot of new sales, which would limit any upside, Jubinville said.
“A lot of the sales and transportation capacity are already booked for sales made a long time ago,” he said. “So, new sales, while we’re seeing bits and pieces fit in here, there’s not really a lot extra we can do.
“We still don’t necessarily have a fluid transportation system to speak of right now.”
— Terryn Shiells writes for Commodity News Service Canada, a Winnipeg company specializing in grain and commodity market reporting.