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ICE weekly outlook: More than weather behind canola uptrend

MarketsFarm — Canola’s sharp rise over the last week can be attributed not only to poor weather on the Prairies, but to other factors as well, according to MarketsFarm Pro analyst Mike Jubinville.

For seven straight trading sessions, canola bids have climbed, from $445.60 per tonne at the close of trading on Sept. 27 to $464.80 on Tuesday.

“Soybean prices which had been on the move higher, to three month highs, have been lending support,” Jubinville said, adding that other vegetable oils in general have been on the upswing.

Canola busted out of its summer-long sideways trading range, he said, and that included busting above its upper resistance of $450-$455 per tonne for the November contract.

But there is a limit, which Jubinville said is tough to gauge.

“My gut feeling is there will be eventually a near-term supply of canola that comes out from the farmer when some targets are hit,” he said.

One such target will be when cash bids exceed $10 per bushel, he said.

Another factor has been the federal government’s cash advance program, which was altered to help farmers hurt by China’s ban on Canadian canola exports.

“There’s a sense that growers, if they’re feeling bullish-minded, may hold supply back from the marketplace and use that cash advance program on canola, [partly to help] deal with near-term cash flow issues,” Jubinville said.

With September being one of the wettest on record on the Prairies, especially in Manitoba, there have been concerns about the crop’s quality.

Jubinville said hopes for the new crop are very likely to be diminished as a late-maturing crop now has to contend with wet conditions and freezing temperatures.

— Glen Hallick reports for MarketsFarm, a Glacier FarmMedia division specializing in grain and commodity market analysis and reporting.

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