MarketsFarm — ICE Futures canola contracts have climbed steadily higher since their late-May lows, nearing chart resistance to the upside on the first day of summer.
Updated renewable fuel targets released by the U.S. Environmental Protection Agency failed to live up to expectations, sparking a speculative selloff in soyoil.
While the limit-down move in soyoil futures on Wednesday would normally weigh on canola, the Canadian oilseed lagged soyoil to the upside while it was rising earlier in the month and spreading between the two commodities was seeing speculators selling soyoil and buying back short positions in canola, according to Ken Ball of PI Financial in Winnipeg.
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Alberta crop conditions improve: report
Varied precipitation and warm temperatures were generally beneficial for crop development across Alberta during the week ended July 8, according to the latest provincial crop report released July 11.
He added that “canola is still looking relatively cheap as an oilseed.”
Declining crop ratings for soybeans in the United States were underpinning the futures there, but Ball said the canola crop was in better shape overall.
“There are still some areas of concern, but canola condition ratings have improved in the past week,” Ball said, noting many dry areas of Alberta and Saskatchewan had received rain.
Statistics Canada releases updated acreage estimates on Wednesday next week (June 28) and Ball expected farmers likely kept with their initial intentions for the most part of seeding about 21.6 million acres of canola.
However, the April report was based off data obtained in late December/early January, rather than closer to spring as typically done in the past, which could lead to larger adjustments than usual.
— Phil Franz-Warkentin is an associate editor/analyst with MarketsFarm in Winnipeg.
