ICE weekly outlook: Market watching late harvest

CNS Canada – Canola futures have found themselves in a downward slide, with the market settling right above major support levels on Oct. 24.

The January contract finished Wednesday’s session at C$491 per tonne, which was right above major support at C$490 per tonne. “If it legs down, I think a swing target could be as low as C$480,” said Ken Ball, of PI Financial in Winnipeg. He added that the price could eventually drop to C$450 per tonne, but that will depend on how the harvest ends up.

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Sunnier and drier weather conditions were allowing farmers in Alberta and Saskatchewan to make some progress, and Ball estimated the total canola harvest may be 80 per cent complete by the weekend.

“More and more areas are finishing up, but there’s still quite a bit to go,” said Ball. “We’ll need another two weeks of reasonable weather to get the majority of it in,” he said adding that the uncertainty while the harvest is still ongoing should provide some underlying support.

Statistics Canada’s survey-based crop estimate released in August pegged canola production at 19.2 million tonnes, while the September estimate using satellite imagery estimated the crop at closer to 21 million tonnes.

“If the crop is 21 million tonnes, we’re probably looking at building the carryout to three million tonnes next year,” said Ball. However, he wasn’t sure if it would actually end up that large, given the dryness in August and later harvest delays.

Beyond the Canadian harvest, Chicago Board of Trade soybeans and soyoil could provide some direction for canola.

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