Glacier FarmMedia | MarketsFarm – As May winds down the prospect of rain saw canola futures on the Intercontinental Exchange fall back on May 28, with the old crop July contract taking the biggest hit.
The day before, it was the weather that pushed canola higher as dry conditions further set in across much of the Canadian Prairies.
“Maybe a wetter June seems to be setting up,” said Jamie Wilton, trader with RJ O’Brien in Winnipeg, Man.
He explained that if that rain falls on the region during the first week of June, that could push canola prices lower.
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However, any continued dryness might drive prices higher.
45Z
Another issue overhanging the canola and oilseeds in general is the ongoing uncertainty over the United States 45Z biofuel tax credit. Wilton said there have been rumours in the market that the U.S. Environmental Protection Agency will soon announce what’s to happen with the tax credit.
There are some in the trade who think the Trump administration will end 45Z, having it caught up in the massive spending cuts. On the flip side, there are those to believe the administration will keep the tax credit, as it greatly benefits Republican-voting farmers.
Should 45Z survive, it could help push up canola values. If it’s eliminated, then a drop is quite likely.
In the meantime, over half of the Prairie canola crop has been planted. Farmers will now look to the sky to see what does or does not fall.
