Cold spring temperatures and a late snowstorm depressed canola markets during the week ended April 3.
While nearby contract prices started the week with relative strength, that petered out by midweek when an impressive amount of snow fell in eastern Saskatchewan and western Manitoba. That, combined with cold temperatures, discouraged some farmer selling and sidelined some trading activity.
Earlier in the week, Reuters published a story implying China would soon begin to buy more Canadian canola. However, the rumours proved unfounded, and reports soon confirmed that China will continue to block shipments from Richardson International and Viterra. Canola seed shipments from other companies will continue to be delivered to China, but with a reduced dockage limit of one per cent. The original story was taken down, but canola prices briefly received a boost in the meantime. The Canadian government has since confirmed there is no imminent deal with China.
Oil futures jumped by over 16 per cent on Friday morning, following news of an emergency meeting scheduled for Monday by the Organization of Petroleum Exporting Countries and its allies (OPEC+). The cartel will hold a video conference on Monday that is open to all producers, though it is not yet clear who will attend. The goal of the meeting is to agree on a global supply cut totalling 10 million barrels per day, in light of Saudi Arabia’s intent to flood global markets with oil.
Prolonged weakness in the Canadian dollar has been a supportive factor for canola. The dollar has dropped dramatically over the past month due to volatility in financial markets sparked by the COVID-19 pandemic, as currency traders fled to the perceived safe haven of the United States dollar. The dollar held around 70 U.S. cents this week.
Soybeans on the Chicago Board of Trade were another bearish influence on canola. Soybeans were considerably lower on the week following the release of the U.S. Department of Agriculture’s prospective plantings report. Nearby contract prices dropped by 23 U.S. cents on Wednesday to finish at US$8.60 per bushel.