ICE weekly outlook: Firm canola has limited upside

Published: December 7, 2018

, ,

ICE January 2019 canola futures, with Bollinger (20,2) bands. (Barchart)

CNS Canada — Canola futures on the ICE Futures platform moved higher during the week ended Thursday, as the market corrected off of the lows hit in late November.

Gains in Chicago Board of Trade soybeans and a smaller 2018 Canadian canola crop contributed to the advances, although values may not have much more room to the upside, according to an analyst.

Canola “can maybe bubble up a bit, but it won’t hold,” said Errol Anderson of ProMarket Communications in Calgary. The CBOT soybean market was looking like it could turn lower, which would weigh on canola, he said.

Read Also

Photo: Getty Images Plus

Alberta crop conditions improve: report

Varied precipitation and warm temperatures were generally beneficial for crop development across Alberta during the week ended July 8, according to the latest provincial crop report released July 11.

“This arrest thing just ratcheted this whole thing up,” said Anderson, referring to the arrest of Meng Wanzhou, a top executive with Chinese technology company Huawei and daughter of the company’s founder, by Canadian authorities at the request of the U.S.

The arrest was linked to U.S. sanctions against Iran and is seen as threatening the tentative trade truce reached between the U.S. and China during the G20 summit in Buenos Aires.

While the tentative truce brought some optimism to the soybean market, no actual soybean business was reported and the arrest news was seen as bearish for commodity prices.

Looming South American soybean crops are another bearish influence in the background, and Anderson recommended that canola farmers take advantage of pricing opportunities when they arise rather than hold on.

Canola likely had another $20 to the downside, he said, noting “the world doesn’t care about the cost of production.”

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

About the author

GFM Network News

GFM Network News

Glacier FarmMedia Feed

Glacier FarmMedia, a division of Glacier Media, is Canada's largest publisher of agricultural news in print and online.

explore

Stories from our other publications