Glacier FarmMedia—ICE Futures canola contracts climbed to their highest levels of 2024 in early May before taking a step back on May 8. While the uptrend is still intact, improving moisture conditions across Western Canada could limit any further gains.
“Canola has been showing good independent strength,” said Ken Ball of PI Financial in Winnipeg on the recent runup in the market. He said commercial end users increasing their coverage and speculators covering short positions on expectations for weather issues accounted for some of the buying interest that took values to their nearby highs.
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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.
“The uptrend in canola is still intact,” said Ball, although he added that the potential for a large carryout and likelihood of a good crop in 2024 could lead to problems with burdensome supplies.
Statistics Canada reported Tuesday that canola supplies in the country as of March 31, 2024, came in at 8.3 million tonnes, which was up by about 1.3 million tonnes from the same point the previous year. Agriculture and Agri-Food Canada is currently forecasting ending stocks for 2023/24 of 2.0 million tonnes, but the current slow export pace could see that number increase.
From a chart standpoint, November canola is facing an upside target of C$700 per tonne, according to Ball. While the favourable weather conditions may limit the upside potential, activity in outside markets, such as soyoil, could provide support. European rapeseed has also stayed strong recent, due to cold and wet conditions for the crops there.
—Phil Franz-Warkentin is an associate editor/analyst with MarketsFarm in Winnipeg.
