ICE weekly outlook: Canola still pointed lower

(Dave Bedard photo)

CNS Canada –– ICE Futures Canada canola contracts moved lower during the week ended Wednesday, and could be due for some more weakness as the Canadian harvest picks up and large U.S. soybean production prospects weigh on oilseeds in general.

With expectations for a record-large U.S. soybean crop, there has been a dramatic change in the supply/demand balance sheet for soybeans, which is now being priced into the market, said Brenda Tjaden Lepp, chief analyst with FarmLink Marketing Solutions in Winnipeg.

Harvest operations are also starting up in Western Canada, which is shifting the nearby attention to yield reports and production prospects.

“Certainly there are areas that are disappointing, but there are a lot more areas that are reporting better yields than they were expecting,” she said.

Improving yield prospects weren’t necessarily bearish, but will help limit concerns over supply tightness.

From a technical standpoint, the November canola contract hit an inter-session low of $409 per tonne last Thursday (Sept. 11), but managed to hold above the $410 level in subsequent days.

“I couldn’t put a number on the canola downside unless I could put a number on the soybean downside, but that’s just too hard to do right now,” said Tjaden Lepp.

In addition to the Canadian harvest pressure and large U.S. soybean crop, South American weather will be hugely important looking ahead. Farmers on that continent will begin planting crops soon, and acres are expected to be up, said Tjaden Lepp.

On the other side, soyoil has shown some strength, which could help canola find some stability relative to soybeans, she said.

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

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