The ICE Futures canola market was relatively strong during the last week of April, despite the global pandemic that continued to roil most outside markets.
The July canola contract trended higher all week, moving off of major lows in the process. From a chart standpoint, July canola sees support around $450 per tonne, with the $470- to $475-per-tonne area the likely upside target for the time being.
That said, canola may be starting to look expensive compared to other oilseeds. While demand still looks good for now, crush margins have deteriorated by about $25 per tonne over the past month.
The COVID-19 pandemic will remain the lens through which all markets are traded for the foreseeable future, but life goes on and spring weather conditions should come into play as well.
Many fields that were left to overwinter across the Prairies due to the adverse fall weather are finally being harvested. Reports on the size and quality of what’s coming off are wide ranging so far, but will be followed closely by market participants.
Seeding is getting started, although many areas are still wet and it will likely be a later year than normal.
Statistics Canada’s data is also a bit later than normal, as the agency postponed the release of its acreage survey until May 7. Pre-report opinions are divided, with the general consensus calling for a slight reduction in seeded canola area.
However, any minor acreage adjustments are unlikely to alter the large supply situation too much. Agriculture and Agri-Food Canada is forecasting a 3.2-million-tonne canola carry-out for the current marketing year, and sees that declining only slightly in 2020-21.
In the U.S., spring planting is also underway, with recent activity in the futures likely shifting some intended area away from corn and into soybeans.
Corn futures have been the hardest hit by the pandemic, as crude oil prices fell and ethanol plants were shuttered across the U.S. Slaughterhouse closures were also raising concerns in the feed sector.
July corn found some support around US$3.10 per bushel during the week, but could easily drop below the psychological US$3 mark. July soybeans see nearby support around US$8.30 per bushel.
Wheat saw some larger price swings during the week, with improving moisture conditions in parts of Europe and the Black Sea region casting a bearish light despite expectations for solid global demand.