CNS Canada — ICE Futures Canada canola contracts posted modest losses for the week ended Wednesday, with the January contract falling slightly below the key technical benchmark of $470 per tonne.
Still, at least one analyst said he thinks canola is well positioned to climb higher.
A bearish Statistics Canada report on Friday pegged canola production at 17.2 million tonnes in 2015-16, but the weaker Canadian dollar helped offset the initial losses.
“There’s business being done everywhere; with the weak Canadian dollar, canola is well-positioned at these prices,” said Wayne Palmer, senior analyst at Agri-Trend Marketing in Winnipeg.
Exporters are anxious to get their hands on as many supplies as they can at the current price, he said.
“You’re getting old- and new-crop prices where people are getting antsy and paying 11 bucks a bushel, which is why the open interest is going up. You have very good farmer selling right now.”
As for the StatsCan report, Palmer said he believes the estimate is too large, and should be closer to 16 million tonnes.
“This wasn’t a bumper crop, it was maybe an above-average crop,” he said.
Going forward in 2016, Palmer said, canola should gain in value.
“Canola will climb… it has to. I think you’ll see these as low prices in 2016.”
–– Dave Sims writes for Commodity News Service Canada, a Winnipeg company specializing in grain and commodity market reporting.