ICE weekly outlook: Canola values stay rangebound

ICE January 2020 canola (candlesticks) and CBOT January 2020 soybeans (yellow line). (Barchart)

MarketsFarm — Canola prices have been characterized as “firm one day and softer the next,” this week, remaining largely rangebound in light trading activity.

“It’s hard to tell why, but canola oscillates between stronger than soybeans and then weaker,” said Ken Ball of P.I. Financial in Winnipeg.

“It’s just spreaders playing back and forth with the U.S. markets.”

Prairie weather is expected to be less than hospitable in the days and weeks to come, with unseasonable cold temperatures and rain in the forecast. Pockets of snow may also be seen in some regions, which will inject a weather premium back into markets.

However, large carryout stocks from previous years, and high output forecast for the 2019 growing season, will likely keep prices relatively stagnant.

“It’s going to take a lot to shake this market loose,” said Ball.

A boost to soybeans on the Chicago Board of Trade would also provide an upside to canola, but a trade deal between the U.S. and China is a spectre haunting markets. Some soybeans have been purchased by China as a gesture of goodwill, but nothing is written in stone yet.

“It could happen down the road, but nothing is brewing currently,” he said.

Japan and the U.S. have reached a preliminary trade deal that included reduced tariffs on U.S. pork and beef. Particulars are expected to be announced in weeks to come.

— Marlo Glass reports for MarketsFarm, a Glacier FarmMedia division specializing in grain and commodity market analysis and reporting.

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