ICE Futures Canada canola futures have officially entered what one analyst calls “the silly season weather market.” Futures went through the proverbial roof the week of July 3 on concerns that a Prairie heat wave would stress the crop during its critical flowering period.
The dominant November contract climbed $19.30, to hit $517.30 by that Friday’s close. It also marked the end of the July-November spread trade, which dominated much of June.
The hot, dry bubble that entered southern Saskatchewan from the U.S. during the latter part of June eventually spread into much of Western Canada. Both Alberta and Saskatchewan are experiencing issues with soil moisture in certain locations. Heat wave warnings were issued in both provinces before the weekend began. The heat comes at a vulnerable time for the canola crop as much of the crop went into the ground late, making it susceptible to heat blast.
The loonie climbed above 77.5 U.S. cents by late Friday afternoon, which helped to limit canola’s advances.
Strength in the U.S. soy complex helped to underpin canola through the start of July.
The soybean market climbed sharply during the past week but its rise on the charts wasn’t quite as dramatic as its Canadian cousin. Still, the dominant November contract chalked up a gain of 60 U.S. cents to hit US$10.15 a bushel by Friday’s close. Much of the U.S. Midwest is expected to stay hot and dry, which underpinned the market.
The wheat market has been on a roller-coaster during the past few days, as fears the market was overbought finally brought a halt, however temporary, to the rally. Hot, dry conditions are still forecast for much of the U.S. northern Plains, though, so end-users hunting for high-protein wheat are likely still in for a tough slog.
The corn market realized some gains during the past week. The dominant December contract climbed nearly 13 U.S. cents during the week, to hit US$3.92. The gains might have been higher but news that China will auction off four million tonnes of corn in the coming week kept a damper on the market. Precipitation maps indicate many corn-growing regions are simply too dry.