ICE weekly outlook: Rallying canola not at top yet

ICE March 2021 canola with 20-, 50- and 100-day moving averages. (Barchart)

MarketsFarm — ICE Futures canola contracts continued to climb higher during the first few trading days of 2021 — and could still see more gains before the inevitable correction.

“We’re not necessarily at the top,” said analyst Errol Anderson of Pro Market Communications in Calgary, adding “the market is going through intense demand rationing right now.”

While Canada is facing a very tight canola carryout scenario, a similar situation with the U.S. soybean market was also supporting oilseeds in general.

“Their soybean shelves will be basically bare,” Anderson said.

He expected soybean futures could be headed towards US$15 per bushel, which would be supportive for canola.

“Technically, we’re quite overbought, but fundamentally we could still go higher,” said Anderson. He expected a correction would eventually come forward, but likely not until February.

The spread for cash bids in the countryside is starting to widen, highlighting the fact that some end-users are still exposed and need to cover previous sales.

New-crop bids have lagged the front months to the upside, but are still strong historically speaking for this time of year.

— Phil Franz-Warkentin reports for MarketsFarm from Winnipeg.

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