ICE weekly outlook: Charts up for canola, but little else

(Dave Bedard photo)

CNS Canada — ICE Futures Canada canola contracts posted solid gains during the week ended Wednesday, as prices broke above nearby resistance and speculators added to long positions.

While there is still more room to the upside from a chart standpoint, an analyst cautioned there was little fundamental news to account for the gains.

“The funds have bought 4,000 (contracts) in the past two days and are buying more today,” market analyst Wayne Palmer of AgriTrend Commodities said Wednesday.

Fund buying could take prices up another $20 per tonne, especially with a lack of significant selling on the other side, he said.

The May contract settled Wednesday at $473.10, while new-crop November closed at $496.80.

While farmers should be selling into the rally, they are unlikely to be aggressive sellers until the fund buying dries up and prices drop, said Palmer.

Tightening U.S. soybean supplies have underpinned the CBOT soy complex recently, which has spilled into the canola market. However, Palmer said more bullish news was likely needed to keep the momentum to the upside in the U.S.

The supply/demand situation is completely different in canola, with large carryout supplies of 2.5 million to 3.5 million tonnes expected at the end of the current marketing year.

Attention is also starting to turn to the new crop. Statistics Canada releases its first survey-based acreage estimates on April 24, and early indications are pointing to increased canola plantings.

If the number then is large, it could put some pressure on new-crop canola prices, said Palmer.

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

 

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