ICE weekly outlook: Canola down, but still watching beans

(Dave Bedard photo)

CNS Canada — ICE Futures Canada canola contracts moved lower during the week ended Wednesday, hitting their softest levels in a month as bearish technical signals and increased farmer selling weighed on values.

While the technical bias has turned lower, the Canadian market could still find some spillover strength from the CBOT soy complex, according to a trader.

Positioning ahead of Statistics Canada’s planting intentions report on Thursday contributed to the recent weakness in canola, as industry participants generally expect to see an increase of at least a million acres in canola seedings compared to the 19.9 million planted in 2013.

However, “unless it’s a real shocker,” the report is unlikely to have a long-lasting effect on canola futures, said Keith Ferley of RBC Dominion Securities in Winnipeg.

The survey was conducted at the end of March, he said, and will already be considered old news by the time it’s out.

Spring conditions remain generally cool and wet across Western Canada, which is turning some of the attention in the futures market to planting conditions. Ferley said the late thaw and weather uncertainty were keeping some support underneath the canola market.

Canola also remains underpriced compared to CBOT soybeans, leaving room for gains relative to the U.S. market, said Ferley.

From a technical standpoint, the July canola contract settled at its lowest level since late March, at $456.30 per tonne, moving below some nearby support levels.

Next support was seen at the psychological $450 per tonne level, with the nearby highs around $480 per tonne likely forming a top for the time being, according to analysts.

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


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