ICE weekly outlook: Canola balance shifting higher

(Dave Bedard photo)

CNS Canada –– Canola futures on the ICE Futures Canada platform held relatively rangebound during the week ending Wednesday, but were slightly stronger overall.

The nearby trend has shifted higher for canola, as the logistics issues that have limited grain movement over the winter start to show signs of clearing up.

“We have tipped the balance between how many things are bearish and how many things are bullish,” said Brenda Tjaden Lepp, chief analyst with FarmLink Marketing Solutions.

“It’s been clear through the basis that channels are opening up,” she said. After cash prices had been well below $8 per bushel for most of the winter, basis and the futures have both improved over the past month to the point where cash bids can now be found at well above $9.50/bu.

The improving basis implies logistics have improved and domestic crushers and line companies can once again take on new business, said Tjaden Lepp.

While more canola is starting to move again, she said the market is still oversupplied and activity in the U.S. soybean market will also be important going forward.

Soybean fundamentals are starting to point lower, but the wide spread between beans and canola will likely narrow in if soybeans decline as the funds adjust their long soybeans/short canola positions, she added.

From a chart standpoint, canola may be consolidating between $420 and $460 per tonne, Tjaden Lepp said.

— Phil Franz-Warkentin writes for Commodity News Service Canada, a Winnipeg company specializing in grain and commodity market reporting.

 

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