ICE weekly outlook: Canola to keep support going forward

(Dave Bedard photo)

CNS Canada — The ICE Futures Canada canola market rose over the week ended Wednesday. A lack of farmer selling combined with currency issues and action in the soy market to give the market a boost.

One trader said the declining open interest caused him to think funds were also liquidating some of their long positions. The problem was, there was really no one willing to take on those short contracts.

“Canola is in a world of its own. The Canadian dollar is still at US75 cents, which is a detriment to end-users,” said Wayne Palmer of Agri-Trend Marketing in Winnipeg.

China’s decision to lower its allowances for dockage in canola imports after April 1 was also problematic, he said, doubting very many players will want to send shipments under those conditions.

Fortunately, he said, most exporters expect a truce will be called.

“So the export demand looks quiet, but what is taking the pace up here is the crusher,” said Palmer, adding crushers could have all-time record production this year.

Going forward, he expects canola will stay well supported. “The elevator company, the exporters and the crushers are short cash and they’re short futures, and that’s why the canola market, with a little bit of short-covering, can’t go down,” he said.

Dry parts of Western Canada are raising some alarm bells, but most stakeholders agree it’s too early to truly know what the moisture situation will be like for spring seeding.

“But as we go forward, this is going to become more and more of an issue.”

— Dave Sims writes for Commodity News Service Canada, a Winnipeg company specializing in grain and commodity market reporting.

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