CNS Canada — ICE Futures Canada canola contracts continued their steady upward trend during the week ended Wednesday, posting their highest daily settlements since July.
Continued strength is possible, but those gains will depend on activity in the Canadian dollar and the U.S. soybean market.
“There’s a firm tone in canola,” said Errol Anderson of Pro Market Communications in Calgary. He linked most of that strength to the weakness in the Canadian dollar and was of the opinion that the currency had more room to the downside.
The Canadian dollar dropping from US80 cents to US77.5 cents works out to a sizeable savings for foreign buyers, analyst Wayne Palmer of Agri-Trend in Winnipeg said.
Fund traders were also on the buy side, adding to their growing net-long positions, he added.
Farmers already made good sales, he said, and were now content to wait for higher prices before re-entering the market, which also underpinned the futures.
Both Palmer and Anderson estimated a move to $12 per bushel in the cash market would likely trigger some farmer selling, which would create a plateau for the futures.
While the canola market remains relatively firm, “to find a new round of buying it will need support from other factors,” said Palmer.
The U.S. soybean market was currently “stuck in neutral,” he said, but it could provide that spark if anything causes the beans to rally.
— Phil Franz-Warkentin writes for Commodity News Service Canada, a Winnipeg company specializing in grain and commodity market reporting. Follow him at @PhilFW on Twitter.