ICE Futures Canada canola contracts moved lower during the week ending Wednesday, as large production prospects and spillover from the softer tone in CBOT (Chicago Board of Trade) soyoil weighed on values.
Harvest pressure is expected to keep the path of least resistance to the downside over the next couple of months, although activity in outside markets could come forward to provide some support.
"The commercial system is anticipating a surge in farmer deliveries in September and October, which will saturate the demand for canola," said Jerry Klassen, manager of GAP SA Grains and Produits in Winnipeg.
"Overall, the canola market is adjusting to the sizeable crop we have coming on here," he said, adding that canola has not rallied to the same extent as soybeans recently.
While tight U.S. soybean supplies and uncertainty over the size of the U.S. crop remain supportive, canola production is more certain, which will cause canola to lag soybeans in any potential move higher.
"Canola could divorce itself (from soybeans) during the harvest period, because we do have a sizeable crop," said Klassen.
Looking past the North American harvests, Klassen said attention will eventually shift to South American growing conditions for the soybean crops there.
The tight U.S. soybean supply situation means the market will be counting on a large crop out of South America, he added.
-- Phil Franz-Warkentin writes for Commodity News Service Canada, a Winnipeg company specializing in grain and commodity market reporting.