CNS Canada — The ICE Futures Canada canola market was stronger during the week ended Wednesday, taking some direction from the rally seen in Chicago soybean futures.
Soybeans gained about US30 cents per bushel during the week, but canola was lagging to the upside as traders bet the U.S. rally would be short-lived, said Ken Ball of PI Financial in Winnipeg.
But if CBOT soybean futures start to turn lower again, the canola market isn’t likely to fall as fast, he added.
“Firmness in the soybean oil combined with the weak Canadian dollar is giving canola good underpinning support,” he said.
The loonie dropped well below the US85-cent mark during the week, and has lost about four cents against its U.S. counterpart over the past few months. A falling crude oil market is contributing to the currency’s weakness, which is in turn making canola more attractive to crushers and exporters.
Ball said the weaker Canadian dollar was making canola look about $20 to $30 cheaper than it would be if the currency was stronger.
“If it wasn’t for the Canadian dollar, I would guess that the nearby months of canola would be more around $420 per tonne right now,” he added.
The recent firmness in canola futures has also slowed farmer selling, as they seem to be waiting for prices to continue moving higher.
“With that little sharp rally in the beans got everyone a little bit bullish,” Ball said. “I think farmers are hanging back a little bit, but over the course of the next month or two, you’ll see bouts of farmer selling appearing. They’re going to sell in the New Year, but they don’t have to sell right away. They will pick their spots.”
Current opportunities are good for farmers willing to sell some of their supplies, he added. Cash prices are hitting the $10 per bushel in some regions of Western Canada, Prairie Ag Hotwire data shows.
— Terryn Shiells writes for Commodity News Service Canada, a Winnipeg company specializing in grain and commodity market reporting.