MarketsFarm — ICE Futures canola contracts remained pointed higher during the week ended Wednesday, hitting some of their best levels in two years.
However, its upside may be limited as harvest picks up over the next month.
“Canola could go a little higher, but we’re probably pushing upper ranges for now until we have more information both about the U.S. crop and the Canadian crop,” said Ken Ball of PI Financial in Winnipeg.
While swathing is underway, not much combining has occurred yet, said Ball. As a result, there is still some uncertainty over how badly yields were hurt by heat and a lack of moisture in August.
Statistics Canada, in its latest estimate released Monday, pegged Canada’s 2020-21 canola crop at 19.4 million tonnes.
While that headline number came in at the lower end of trade guesses and supported prices, the government agency also raised its 2019-20 canola production estimate by nearly 900,000 tonnes, to nearly 19.5 million tonnes.
The government agency is set to release data on ending stocks for the 2019-20 crop year on Friday (Sept. 4), which could provide some nearby direction.
Average trade guesses prior to the latest production estimates had placed canola stocks as of July 31 around 2.1 million tonnes, said Ball. However, with the upper revision to last year’s crop, that number may be closer to 2.8 million or 2.9 million.
The canola market will also continue to follow the U.S. soybean and soyoil markets closely, Ball said.
Dryness and winds were also causing damage to the U.S. Midwest’s soybean crops, but the extent of any crop losses remains to be seen.
— Phil Franz-Warkentin reports for MarketsFarm from Winnipeg.