CNS Canada –– ICE Futures Canada canola contracts held rangebound during the week ended Wednesday, with small losses in the front months and gains in the more deferred positions.
While activity remains somewhat subdued for the time being, any future moves will be highly dependent on weather conditions heading into the growing season.
“The markets are very lethargic right now, not just canola,” said Errol Anderson of ProMarket Communications in Calgary.
With many areas of the Prairies starting to look on the dry side, he said, shifting weather forecasts could be a major driver in taking canola out of its range.
If some more moisture materializes, Anderson estimated there was about $20 room to the downside in canola.
“If we get timely rain start to come in, (prices) will ease into the crop year-end… But if we get dry as a bone, that will not happen.”
From a seasonal perspective, the canola market is moving into a lower demand period as crushers slow down for annual maintenance and export customers wait on the new crop, said Anderson.
A lack of farmer deliveries, which has provided some support recently, also can’t last forever.
Beyond the weather, other outside economic factors will also come to play in the agricultural markets. Anderson said the strengthening Canadian dollar was one such factor to watch, with a US84-85 cent Canadian dollar a possibility later in the summer months.
“If we get a stronger dollar and rain, that’s a formula for a drop,” he added.
— Phil Franz-Warkentin writes for Commodity News Service Canada, a Winnipeg company specializing in grain and commodity market reporting.