CNS Canada — ICE Futures canola contracts held relatively rangebound during the week ended Wednesday, although the looming harvest and weakness in CBOT soybeans could weigh on values going forward.

The November canola contract held above the psychological $500 per tonne level during the week, which should be providing decent opportunities for hedging, said commodities investment advisor David Derwin of PI Financial in Winnipeg.

However, he cautioned, current prices may be unsustainable if the U.S. soybean market stays under pressure.

“A big driver in the whole process is soybeans,” said Derwin, noting the spread between CBOT soybeans and ICE canola was at historically wide levels. “Canola is relatively expensive compared to soybeans.”

With the bulk of the canola harvest approaching, “we can often see a little seasonal weakness come into play, but the bigger weakness could come from the low soybean price and the good soybean crop in the U.S.,” said Derwin.

“The question then is, will soybeans move up, or canola move down?”

What independent strength canola has, stems from concerns over heat and dryness in parts of the Prairies, although Derwin noted that anecdotal reports were still pointing to average yields overall.

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