CNS Canada –– The ICE Futures Canada canola market lost ground during the week ended Wednesday, pushed down by losses in the U.S. soy complex.
A corruption scandal in Brazil sparked a steep selloff in soybeans during last Thursday’s session, which affected oilseeds around the world, including canola.
Canola’s dominant July contract lost $4 during the holiday-shortened week. Canadian markets were closed Monday for Victoria Day.
Since then, however, canola has shown some improvement, taking support from weather issues and tight commercial stocks.
The Canadian Grain Commission last week pegged commercial stocks of canola at under a million tonnes, a number which is considered tight.
“Weather in Alberta and western Saskatchewan is key,” said Keith Ferley of RBC Dominion Securities in Winnipeg. “Wind warnings are moving through Saskatchewan. That will continue to mess up seeding progress.”
Recent gains in the Canadian dollar have also had a bearish effect on canola, Ferley noted.
“The OPEC meeting tomorrow (Thursday) could also influence the Canadian dollar,” he said.
Key resistance for the front-month July contract is around $530 per tonne, said Ferley.
The November contract is slightly harder to pin down, as it has been bouncing back and forth near the $500 mark.
“So support is a little under that at the $497 (per tonne) or $498 mark,” he said.
Funds are long in the July contract, he said, probably to the tune of 10,000 to 15,000 contracts.
Crush margins are also underperforming. “They’ve been down hard the past two days.”
The crop in Alberta is where Ferley said much of the attention now lies.
“Do they get the crop in?” he said. “Or will they be pushing mid-June? That’s real important when you start looking at crop insurance.”
— Dave Sims writes for Commodity News Service Canada, a Winnipeg company specializing in grain and commodity market reporting.