ICE canola futures have steadied, following considerable gains since mid-August, and remained largely rangebound during the week ended Thursday, Oct. 15.
Canola prices started the week at $525.30 per tonne, with the November contract losing $2 per tonne on Tuesday. Trade activity was choppy for the rest of the week, and the November contract closed at $525.40 per tonne on Thursday.
Canola prices hit two-year highs in mid-September, which was a counter-seasonal rally as harvest pressure typically keeps a lid on prices. The increase in prices was due partly to export interest, as countries around the world attempt to keep their pantries stocked during the COVID-19 pandemic.
However, supply issues still weigh heavily on the market. Farmer cash inventories coming into the commercial pipeline have stalled out the rally, as visible supplies for canola are around 1.7 million tonnes, according to recent data from the Canadian Grain Commission (CDC).
Canola prices also took influence from Chicago soyoil values this week, though canola held up compared to the comparable vegetable oil. On Oct. 15, the November soyoil contract lost seven-tenths of a cent, closing at 33.12 U.S. cents per pound.
Slight weakness in the Canadian dollar provided support to canola prices. The dollar was around 75.5 U.S. cents for most of the week.
U.S. soybean prices have tested contract highs recently, aided by dryness in key growing regions of South America. As North America’s harvest winds down, market participants will be watching South American weather for indications of how their soybean crops will grow.
A recent long-term forecast calls for widespread rains in Brazil’s north-central growing regions, which will aid in soybean planting. The Rosario Grains Exchange has lowered its forecast for Argentina’s wheat crop by one million tonnes, to total 17 million tonnes, citing prolonged dry conditions in key growing regions.
U.S. wheat futures jumped significantly this week, with the nearby Kansas City hard red wheat contract closing up by 22.6 U.S. cents per bushel, at US$5.57.