CNS Canada — ICE Futures Canada canola contracts moved lower during the week ended Wednesday, as the market retreated from nearby highs.
However, canola is lacking any clear direction for the time being and is expected to remain rangebound overall until some fresh fundamental news comes forward.
“The market is in a ‘wait and see’ mode right now until the spring advances a little further,” said Ken Ball of PI Financial in Winnipeg.
With no significant seeding taking place across Western Canada to date, he said the canola market was getting a little nervous, especially as conditions remain cool and wet in many areas.
However, the latest forecasts are looking a little warmer and drier, which should allow planting activity to pick up within the next week.
If the weather stays good, Ball said, it could put some pressure on canola prices.
Planting was also late a year ago, and farmers still ended up with record yields. “If the crop gets off to a good start, pressure could definitely develop as we could be dealing with over 20 million tonnes of canola next year… which is a bit ominous,” said Ball.
In the meantime, commercials are showing good demand for old-crop canola, as it remains relatively cheap, he said.
Given the large supply situation, he said it made sense for end-users to be booking more old-crop coverage, especially if any problems materialize in the new crop.
Canola can also be expected to continue to take some direction from CBOT soybeans, said Ball.
— Phil Franz-Warkentin writes for Commodity News Service Canada, a Winnipeg company specializing in grain and commodity market reporting.