Canola futures took a step back during the week ended April 13, weighed down by strength in the Canadian dollar. Traders began exiting the ICE Futures Canada May contract and securing more favourable positions.
While the July contract fell $11.30 on the week, to $526 a tonne, it still showed independent strength given the bearish carry-out situation.
Cold weather across the Prairies sparked ideas that this year’s plantings could be reduced. While some traders theorized canola could be swapped out in favour of other crops, other market-watchers voiced different ideas, saying farmers would simply switch to shorter-season varieties.
Mike Jubinville of ProFarmer Canada pointed out that while soybeans were one of the crops held up as a replacement, it still couldn’t match canola.
“We get lower-protein soybeans here and the market doesn’t want those,” he said.
Wheat and pulses are typically seeded ahead of canola. If this year’s spring seeding is delayed, the possibility exists that Canada could see more canola seeded than previously forecast.
Total canola exports were lagging last year’s pace, but improved rail service across Western Canada could help make that up in weeks to come.
From a technical perspective, canola has been respecting the trend line drawn upward off the March low, despite the recent losses. Resistance is still hanging somewhere in the $530- to $540-per-tonne range, a level canola hasn’t managed to really top since 2015.
In the U.S., May soybeans clawed back the gains they had lost the previous week, rising 20 cents between April 6 and 13. One of the catalysts behind the jump was the fact Brazilian soybeans were actually more expensive than their U.S. counterparts, which drew in buying from Europe and Mexico. The declining size of this year’s soybean crop in Argentina also gave prices a boost.
It was a steadier week for the corn market, with the front-month contract declining by just 2.25 U.S. cents during the week. The corn crop in Argentina is also declining, which lent some support to values. However, projections for the U.S. carry-out are rising, which will only add to the large volume of corn stored in U.S. bins.
Chicago wheat futures were virtually unchanged during the week. Dry, cold conditions over the U.S. Plains continued to create ideas that this year’s crop could possibly suffer some yield losses and a delayed seeding window. Export sales for the week were also disappointing.