CNS Canada — With questions about the size of Western Canada’s canola crop remaining, ICE Futures Canada traders are looking to an upcoming Statistics Canada report for indications on where to move next.
Sharp advances in the Chicago Board of Trade soyoil market underpinned canola on the week, and investors are waiting to see if those trends continue, one Winnipeg-based trader said.
Statistics Canada releases its production of principal field crops report on Dec. 6, which is expected to give a better sense of the size of this year’s crop.
“The canola situation still looks reasonably well-supplied, even though exports are starting to perk up, but there are still a lot of things up in the air,” said Ken Ball of PI Financial Corp.
Previous StatsCan estimates may have understated the size of the crop, with projections around 17 million tonnes, he added.
“That’ll be the focus going forward: will the report confirm a crop that is the 18-19 million-tonne range?”
“Many regions have managed to get the canola off, there’s still a few areas that are struggling, and it does appear that it’s a very large canola crop in general,” Ball said.
Canola gained $15.40 per tonne in the January contract in the week ending Wednesday, with sharp advances from CBOT soyoil providing spill over support.
CBOT soyoil advanced more than six per cent in the December contract on Wednesday, following an announcement from the U.S. Environmental Protection Agency, which will require U.S. refiners to use record amounts of biofuel in 2017.
The news caused a rally in the U.S. vegetable oil market, but canola traders were lagging to the upside, and will be watching to see if the trend continues.
“We’re just not too sure whether this is going to result in an extensive upswing in bean oil over the next few weeks, or if it’s a one-day flash in the pan,” Ball said.
— Jade Markus writes for Commodity News Service Canada, a Winnipeg company specializing in grain and commodity market reporting.