ICE weekly outlook: Canola watching USDA report

 (Dave Bedard photo)

CNS Canada — ICE Futures Canada canola contracts advanced during the week ended Wednesday, as weakness in the Canadian dollar and solid support from vegetable oil pushed prices higher.

The front-month May contract started the period below technical resistance but soon climbed above $470 per tonne and at one point appeared ready to test the $480 mark.

“The U.S. dollar index has weakened and that will have an impact (on canola),” said Jonathon Driedger, a senior market analyst with Farmlink Marketing Solutions.

Canola also continues to take its cue from soyoil and Malaysian palm oil, which should continue, he said.

The big factor facing canola — and many other agricultural commodities in North America — is Thursday’s release of the U.S. Department of Agriculture’s acreage and quarterly stocks reports, Driedger said.

That’s not to say it “will automatically be this big market-moving, volatile report, but it has the potential,” he said.

This week also saw China’s decision to back off on an April 1 deadline to lower dockage allowances on imports of Canadian canola. The reduced dockage allowance will now take effect Sept. 1.

China’s move was certainly supportive for the market, Driedger said, but he’s not sure it was really ground-breaking.

“It’s tough to say how it impacts new export sales as we look further ahead.”

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

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