CNS Canada — ICE Futures Canada canola contracts were lower for the week ended Wednesday, as continued losses in soybeans, and technical factors, weighed on canola values.
The spillover weakness from soybeans was pronounced, according to analyst Wayne Palmer of Agri-Trend Marketing in Winnipeg, who noted beans were 40 cents off their nearby highs.
The bias is pointed lower, he said, as the May canola contract is threatening to break through the key point of $455 a tonne. It briefly moved below that level Wednesday but managed to settle right at that key point.
“If you take the futures under $455 and head to $450 you will see fund liquidation and it could get pretty ugly, pretty quick,” he said.
From a fundamental position, canola enjoyed on and off support from U.S. soyoil and other players in the vegetable oil market. However, the Canadian dollar was extremely choppy during the week.
Palmer said he wonders if some farmers will be tempted to switch to flax or pulses this planting season if values fall below the $450 mark.
“Is $450 a high enough price to entice producers to plant more canola? What are they looking for?” he said.
Palmer is also focused on the July/November spread. Many traders have been long on it to see if it will break into carrying charges, he said.
— Dave Sims writes for Commodity News Service Canada, a Winnipeg company specializing in grain and commodity market reporting.