MarketsFarm – Canola contracts on the ICE Futures platform saw some large moves over the past week, initially moving higher in sympathy with the United States soy complex before taking back most of those gains as both markets reacted to shifting weather forecasts.
Showers continue to pop up across the U.S. Midwest, despite the longer-range hot and dry forecasts, which was subduing the soybean market and in turn weighing on canola, according to Ken Ball of PI Financial in Winnipeg.
He added that Canada’s canola crop was in reasonably good shape as well, but was a few weeks behind normal in many areas and will need good weather through August in order to solidify the yields.
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“If the crops can come through by September in reasonably good shape, (prices) could go lower,” said Ball, adding “we’re still high enough that any perception that crops are decent to average could bring prices down.”
While canola is at historically high prices and a retest of the C$800 per tonne level in the November contract was possible, Ball expected the market would uncover solid demand at any attempts at moving lower. “Canola crush margins are getting very attractive again, so there should be some commercial interest,” he said.
