ICE Futures Canada canola contracts chopped around for the week ended July 21, torn between conflicting weather issues, before finally ending relatively unchanged.
Early in the week, ideas took hold that canola fields in some parts of Saskatchewan and Alberta had likely suffered irreversible damage due to the heat stress suffered in late June and early July. One analyst estimated some fields had already lost five to 10 bushels an acre in heat damage.
However, that support was countered by forecasts calling for rain in Western Canada, which helped cool off the market.
The November contract ended the week at $504.80 a tonne, down $1.40 over the week. The loss was minimal though, when you consider the fact canola had surged over the $530 mark, as recently as July 10.
Technical strength helped keep values aloft as traders were reluctant to take the nearby contract below the psychologically important $500-per-tonne mark.
The support level for canola is likely $5 or $10 below the $500 mark, although any significant change in the weather forecasts could drive it much lower.
The resistance has been projected at the $530 mark by some, but of course, that is only if the heat stress continues to make life difficult for the plants.
Gains in the Canadian dollar continued to eat into crush margins and make canola more expensive on the international market. At the beginning of the week, the loonie was worth 78.93 U.S. cents but that had increased to 79.69 by July 24.
For soybeans, the market continues to be at the whim and mercy of weather conditions in the U.S. Midwest. The dominant November contract broke through major resistance at the US$10-per-bushel mark due to the heat stress affecting soybean fields. That heat was reflected by the declining crop condition ratings put out by the USDA. There are also ideas yields will be lower this year.
The corn market also rose last week, pushed up by hot weather in the U.S. Corn Belt and spillover gains from wheat and soybeans. The market’s rise was thwarted somewhat though, by China’s recent auction from its state corn reserve.
The Minneapolis wheat market remains the pacesetter when it comes to wheat prices in the U.S. However, the meteoric rise it had been on appears to have stalled somewhat as values ended the week relatively flat. End-users continue to scour the continent for supplies of high-protein wheat while hot, dry weather continues to beset the northern U.S. plains.
Both the Chicago and Kansas City markets ended the week slightly lower as ideas took hold that winter wheat stocks were better than expected.