(Resource News International) — ICE Futures Canada canola futures are moving steadily lower, and could see more room to the downside if the weather conditions remain favourable across Western Canada, said a Winnipeg-based broker.
“We’re certainly not out of danger in canola, but it looks like we’ll steadily get more of the crop moved along,” said Ken Ball of Union Securities on the improving crop prospects in Western Canada.
“If we can get through next week, where they might be some cooler air and showers in some areas, and if we do warm up again as forecast, that could really put some pressure” on prices, Ball said.
Yield estimates could be revised higher by as much as two or three bushels per acre, he thought. “That’s quite a bit of canola, well over a million tons more canola potentially coming in,” said Ball.
The better crop prospects are also leading to increased farmer selling, which will also weigh on prices, said Ball.
“Most growers are seeing that a) they have more canola than they originally thought, and b) the price may not be quite as strong as they had hoped for,” he said.
Ball expected routine end-user pricing would limit the downside in canola, although he added that the commodity is still expensive compared to other alternative oilseeds.
“End users will still be fairly active until the crop is quite a bit further past danger,” said Ball, adding that “they don’t want to take any chances.”
However, at the same time he thought the demand could start slowing down if the perception of a large crop continues to grow.