ICE weekly outlook: More virus volatility expected in canola

ICE Futures May 2020 canola with 20-, 50- and 100-day moving averages. (Barchart)

MarketsFarm — A sharp drop in the Canadian dollar helped lessen the blow of the COVID-19 pandemic on the ICE Futures canola market.

However, volatility and uncertainty are expected to remain the feature in the upcoming weeks.

Any strength in canola “is 100 per cent the Canadian dollar and nothing else,” said Ken Ball, of PI Financial in Winnipeg. “There’s no buying going on in canola outside of that.”

The Canadian dollar dropped below 69 U.S. cents on Wednesday, trading at levels not seen since 2003, as currency traders bailed out of most markets in favour of the perceived safe haven of the U.S. dollar.

While the weaker Canadian dollar was supportive on paper, it only provides so much support in reality, as commercial traders usually have currency rates locked in already, Ball said.

“The odds (of the grain markets) going anywhere in this environment are extremely small.”

Ball expected see more volatility in the canola market as trade thins out and investors move to the sidelines to await developments in the COVID-19 pandemic.

The May canola contract settled Wednesday at $457.40 per tonne, about $13 off of the contract low hit only two days earlier.

— Phil Franz-Warkentin reports for MarketsFarm from Winnipeg.



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