Glacier FarmMedia MarketsFarm — Canola futures are expected to climb higher on the Intercontinental Exchange in the coming weeks, commented Phil Speiss, trader with RBC Dominion Securities in Winnipeg. How quickly that happens is dependent on whether demand rationing kicks in or not.
“If we do not show signs of demand rationing, we could take a slow, steady climb to $700 (per tonne),” Speiss said about the July canola contract.
Depends on CGC reports
Conversely, if canola supplies tighten further than expected, then prices will spike much more quickly. He said that largely depends on the weekly and monthly reports from the Canadian Grain Commission.
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Should the CGC’s weekly reports continue to show strong exports and domestic use, then demand rationing becomes a major factor. Also, he said the commission’s monthly report will highlight the amount of canola exported to China.
On April 17, the CGC listed canola exports at 7.38 million tonnes with 16 weeks left in the 2024/25 marketing year. The same day, Agriculture and Agri-Food Canada held its to export estimate of 7.50 million tonnes.
Difference between StatCan, USDA on Canadian canola
There have been rumblings within the trade that Statistics Canada is one million to 1.50 million tonnes short on its canola production figure of 17.86 million tonnes. Meanwhile, the United States Department of Agriculture has kept to its estimate of 18.80 million tonnes through a number of monthly oilseed reports.
Until it’s confirmed demand rationing occurs, Speiss said the canola market will trade sideways.
He pointed to a few outside influences that could weigh on canola values. One has been the Canadian dollar which jumped to more than 72 U.S. cents. Another would be a sharp increase in farmer selling.
“But I don’t see a huge selloff (in canola futures),” Speiss stressed.
He also pointed to the “chatter about China” and there possibly being a trade deal between it and the U.S. down the road. That he said would support U.S. soybeans with spillover coming into canola.
