Canola futures hit their strongest levels of 2024 in early May before backing off those highs as losses in outside markets and improving Prairie moisture conditions slowed the upward momentum.
July canola hit a session high of C$669.10 per tonne May 7, with the new-crop November contract hitting its year-to-date peak at C$682.10 per tonne.
Commercial end-users were thought to be increasing coverage, while speculators covered short positions on the expectation of weather issues. However, widespread rains across the Prairies saw the market take back some of that weather premium. Farmer selling also picked up on the recent strength.
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Charts showed some damage, but both the July and November contracts held above support, with a retest of their recent highs still a possibility. The upside target in November canola comes in at C$700 per tonne, but it will likely take an outside catalyst or weather scare for prices to get there.
From a strictly fundamental standpoint, there’s little reason for canola futures to move much higher on their own. In a report out May 7, Statistics Canada reported canola stocks in the country as of March 31 at 8.3 million tonnes. That was up by about 1.3 million tonnes from a year ago. Agriculture and Agri-Food Canada is currently forecasting ending stocks for 2023-24 of two million tonnes, but the current slow export pace could see that number rise.
Canada has only exported 4.8 million tonnes of canola through 40 weeks of the 2023-24 marketing year, putting the pace about two million tonnes behind what moved by the same time the previous year.
Domestic crush is up on the year, but not by enough to counter the dismal exports.
Soybean and corn futures in Chicago saw similar price activity during the week ended May 9, hitting some of their best levels of 2024 before the speculative short covering subsided and values fell back. Heavy flooding in southern Brazil delayed the last of that country’s soybean harvest and cut into production. The extent of the impact remains to be seen.
November soybeans hit a nearby high of US$12.305 on May 7, with a gap in the charts placing the next upside target at US$12.445. On the other side, the contract was flirting with the US$12-per-bushel level to end the week, with a break below that psychological point setting the stage for a move towards the next support around US$11.75.
September corn finds itself in a range from US$4.60 to US$4.80 per bushel.
