CNS Canada — ICE Futures Canada canola markets were mixed in the week ended Wednesday, and as grower interest in selling ramps up, prices are likely to edge down.
“Canola has been pushed up to some moderately high levels, and it’s been justified in being up there,” said Ken Ball of PI Financial Corp.
“But I think we’re seeing it winding down,” he added.
The July canola contract lost $7.40 per tonne over the course of the week, as traders have started exiting positions.
More deferred contracts posted slight gains on the week, adding between 10 cents and $3.90 per tonne.
Producers have increased selling as growing conditions have been mostly favourable.
Relatively strong canola prices have added to producer selling, Ball said.
Farmers often hold off on selling until they’re certain the new-crop canola is in good condition.
But since beneficial rains in Western Canada have given thirsty crops a boost, farmers are now interested in making sales.
Rain in Western Canada has benefited germinating crops, and will replenish soil moisture, which has taken some weather premium out of the market.
However, the weather hasn’t been entirely bearish for canola, and the tone of the market could easily shift as the summer progresses.
Hail has been reported in some areas of Manitoba, and parts of Saskatchewan and Alberta remain too dry.
But for now, oilseed prices have likely pushed their upper limits, Ball said, assuming North American crops stay in reasonably good shape.
“There are lots of things ahead of us, but for the moment oilseed crops are looking like they’re going to be off to a fairly good start,” he said.
“That’ll limit the upside potential in the marketplace right now.”
On the other side of things, strong demand is keeping support in the market, Ball said, which could limit losses going forward.
Traders are also watching currency action, namely fluctuations in the Canadian dollar, in day-to-day trading.
“Other than that it’s fairly quiet right now, other than the usual currency factors around us,” Ball said.
— Jade Markus writes for Commodity News Service Canada, a Winnipeg company specializing in grain and commodity market reporting.