ICE weekly outlook: Soyoil driving canola market

CNS Canada — Canola futures on the ICE Futures Canada platform finished little changed during the week ended Wednesday, as buyers were reluctant to push the market higher despite large gains seen in outside oilseeds.

“Nobody really wants to buy canola, but they’ll have to push it along with the soy markets if it keeps on going higher,” said Ken Ball of PI Financial in Winnipeg.

If Chicago soybean and soyoil markets build on the strength they saw during the week, canola values will be forced to follow along.

“It’s not the supply of canola, it’s the value of the oil that largely determines the value” of canola, Ball added.

There are still burdensome supplies to be moved in Western Canada, which will continue to overhang futures going forward.

Ball added there is still room to the upside in canola, as long as the outside oil markets move higher as well.

“It’s spring. And anything can happen in the spring. Mother Nature becomes the big factor now,” he said.

Overall, there were no major weather problems to be concerned about for North American oilseeds as of mid-April, though it is possible a weather premium will need to be built into the markets at some point during the growing season.

Ball added that new-crop canola futures already have a bit of a weather premium built into them, given the large supply situation. New-crop canola “is already at a premium price right now,” he said.

How many acres actually get seeded to Canadian canola and U.S. soybeans will also determine the canola market’s price direction.

Statistics Canada releases its first seeding intentions report next Thursday (April 24). Early estimates call for acreage to increase by about one million, to 21 million acres, according to analysts.

— Terryn Shiells writes for Commodity News Service Canada, a Winnipeg company specializing in grain and commodity market reporting.

 

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