Contracts on the ICE Futures Canada canola complex inched their way higher during the week ended May 25, momentarily threatening to break above major chart resistance at $540 per tonne until traders stepped in and took profits before Friday’s close.
Many parts of Western Canada are badly in need of more rain, underpinning trading in recent days. There are concerns yields could suffer if the plants don’t get some significant precipitation before early to mid-June.
The situation in Alberta is slightly less serious as it has had more rain than its neighbours to the east.
Mid-week, word surfaced that China had purchased some soybeans from the U.S. This gave the U.S. soybean market a boost, which spilled over to canola. It also lent more fuel to rumours that a deal between the two sides on trade issues was close.
However, the announcement also had some bearish qualities, as ideas circulated that China’s recent interest in canola could start to wane if soybeans, which contain more of the protein for which China is currently on the hunt, become available.
Technical selling was also a feature late in the week as the July contract neared the top end of its recently established range.
Seeding is progressing well with the recent warm weather. A few crops in Saskatchewan may have to be reseeded, though, due to excessively dry conditions.
It was also a short trading week for canola as Canadian markets were closed May 25 for Victoria Day.
In the U.S., soybeans posted gains on the week, with the dominant July contract rising roughly 18 cents per bushel during the week ended May 25. In addition to rumours of a China/U.S. deal over trade, the market took support from dryness concerns in much of the Midwest.
Corn futures chopped around for much of the week, with the July contract hanging around within a cent of unchanged. Fund buying helped prop up the market during the week, while profit-taking pressured the market before the weekend.
The Chicago wheat market chalked up gains during the week, rising roughly seven cents per bushel. Dry weather in the U.S. southern Plains is becoming a serious concern for producers who fear yields may be curtailed significantly if rain doesn’t arrive soon.