ICE weekly outlook: Canola watching weather

(Dave Bedard photo)

CNS Canada — Snow, rain and cold temperatures over the past week helped canola futures trend higher, hitting their strongest levels in three months.

With about a fifth of the crop facing harvest delays, more gains are possible, but the large U.S. soybean crop remains a bearish influence in the background.

“Farmers continue to struggle to get the last 20 per cent of the canola off, with speculation that we have four to five million tonnes of canola out there,” said Keith Ferley of RBC Dominion Securities.

Uncertainty over export demand, with a lack of confirmation of any new business to China, was limiting the upside, according to Ferley. However, overall “it’s about the weather, and concerns over what will happen with the last part of the crop.”

Poorer-quality canola will still find a buyer from domestic crushers, but export movement may be more limited, he said.

Outside of the bullish Canadian weather situation, the large U.S. soybean crop was a bearish influence in the background.

The U.S. Department of Agriculture pegged the U.S. soybean crop at 4.269 billion bushels in its monthly report on Wednesday. While the number was below average trade guesses, it would still mark a new record.

While the large soybean crop may weigh on Chicago Board of Trade (CBOT) futures, “canola will likely hold its premium,” said Ferley, pointing to the weather concerns.

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

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