CNS Canada — ICE Futures Canada canola contracts ended narrowly mixed for the week ended Wednesday, but not before shooting above the $500 per tonne mark amid concerns over persistent dryness across a large portion of Western Canada.
“If we don’t get those rains or if they’re disappointing then I think this thing is going back up to new highs,” said Keith Ferley, a commodity futures advisor with RBC Dominion Securities.
Showers are forecast to hit dry areas of Alberta and Saskatchewan, including Lloydminster, Medicine Hat, Swift Current and Kindersley.
A potential rain event brought selling pressure into the market, Ferley said, which allowed some growers to move canola on the bounce. The question now is how much rain will actually fall.
“If it (the rain) amounts to something, it will cool the jets from a buyer’s standpoint, and will probably allow the market to pull back down to support, which is probably $20 underneath the market,” he said.
Ferley and other analysts had been waiting for Wednesday’s release of the U.S. Department of Agriculture’s supply and demand report on soybeans and other crops.
However, the news was fairly neutral for soybeans as production estimates stayed relatively in line with previous projections.
Going forward, Ferley expects buying interest from large funds to be muted.
“With the charts cooling off we’re not seeing the funds come in as aggressive buyers. That’s taken buying interest away.”
— Dave Sims writes for Commodity News Service Canada, a Winnipeg company specializing in grain and commodity market reporting.