ICE weekly outlook: Canola headed down, looking for spark

CNS Canada — ICE Futures Canada canola contracts were up and down during the week ended Wednesday, with the bias turning lower as losses in outside markets weighed on values.

Canola lost $10 in two days, with a slide in soyoil and crude oil futures behind some of the spillover weakness.

“We’re not getting any kind of help from the soy products,” said market analyst Wayne Palmer of Agri-Trend in Winnipeg.

Underlying fundamentals for canola were still relatively supportive, he said, with tightening old-crop supplies and plenty of “trouble spots” for developing crops across the Prairies.

However, with the trend lower for the time being, potential buyers are content to stand back and watch values decline.

“Nothing has changed, except soybeans are headed for $9,” said Palmer.

However, “if we ever have a spark, it will cause a huge fire because canola is hugely underpriced,” he said.

A weather scare could provide that catalyst, he said, but “longer-term, if we don’t have a weather scare, we’re going lower before we go higher.”

Statistics Canada releases its updated acreage report on June 29, while the U.S. Department of Agriculture’s latest acreage estimates will be out on June 30.

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

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