MarketsFarm – ICE Futures canola contracts were weaker on Wednesday, sustaining contract prices around C$630 over the Christmas holidays.
The nearby January contract closed at C$629.20 per tonne on Dec. 30, just a few pennies lower than its Dec. 23 close of C$630.90.
Ken Ball of PI Financial in Winnipeg, Man., said canola prices will likely go higher, despite a strong Canadian dollar.
“Canola is quite cheap, and that’s not the job we need it to do,” he said.
He said supplies are forecast to be tight going into spring and summer of 2021, and prices will need to rise in order to discourage demand.
“We need to curb some usage an discourage some demand, and the market isn’t doing that with these prices,” he explained.
“It has to shift to some degree.”
Market participants are also watching South American weather forecasts, as growing conditions have remained dry and crop yields may be called into question.
“Funds are betting heavily that we’ll be losing a fair chunk of South American soybean production over the next month,” said Ball.
Canola has gleaned strength from comparable vegetable oils, as dry growing conditions in South America have given Chicago soyoil contracts a boost. The nearby January contract closed at C$42.67 per tonne on Wednesday.
The Canadian dollar has been keeping a lid on gains for canola prices this week, as the loonie has remained over 78 United States cents due to comparable weakness in the greenback.