ICE weekly outlook: Canola likely to move lower

ICE July 2020 canola with Bollinger (20,2) bands. (Barchart)

MarketsFarm — The direction canola will move in coming weeks depends on three factors: the Canadian dollar, Prairie weather and the Chicago Board of Trade, according to Errol Anderson of ProMarket Communications in Calgary.

“I’m expecting the Canadian dollar to move up a bit, just because of U.S. dollar pressure. That could pull the canola market down a bit,” he said.

Should that occur, Anderson believes canola will remain at the lower end of a sideways range until the end of June, but without any major moves.

As for weather, if conditions worsen and push up prices, Anderson said there could be more movement in local basis levels than in futures.

He noted Alberta is very soaked from the Edmonton area to the northern growing areas. Also, northwestern Saskatchewan has wet conditions, as does southeast Manitoba.

The third factor is the U.S. markets, which Anderson said have been largely on the defensive because of good weather.

Corn, for example, could likely pull back into early July, he said, adding he doesn’t buy the drop in crop conditions reported by the U.S. Department of Agriculture.

USDA on Monday stated corn fell four points to 71 per cent good-to-excellent.

— Glen Hallick reports for MarketsFarm from Winnipeg.

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