CNS Canada — ICE Futures Canada canola contracts rode the coattails of a surging soymeal market during the week ended Wednesday, but one big rain in Argentina could halt the rally in its tracks.
“If there’s more rain in the forecast we will lose ground,” said Mike Jubinville of ProFarmer Canada. “The attitude is the smaller (the soybean crop) gets the higher the price.”
Dry weather in Argentina has had a damaging effect on the outlook for the country’s soybean crop. The country is the largest exporter of soymeal in the world.
Jubinville said the market is focused on the situation and what it means for oilseeds in general.
Canola’s most-active May contract rose $5 during the week and at one point was above the $515 mark.
Jubinville pegs resistance at the $520 per tonne mark and support at $505.
“There’s no sense of topping action I see from a canola perspective,” he added.
Other factors supporting the market include recent weakness in the Canadian dollar, rising crush margins and the affordability of canola relative to other oilseeds.
However, the dominant factor remains the weather and with it the power to reverse canola’s upward movement.
“We are one rain away from this market correcting lower,” said Jubinville.
— Dave Sims writes for Commodity News Service Canada, a Glacier FarmMedia company specializing in grain and commodity market reporting.