CNS Canada — ICE Futures Canada canola contracts moved lower during the week ended Wednesday, but were still holding rangebound overall as market participants continue to try and get a better handle on the size of this year’s crop.
Statistics Canada releases its first survey-based production estimates for the 2014 canola crop on Aug. 21, but the numbers will likely be immediately questioned and downplayed by market participants, given variable conditions across the Prairies this season.
“We are in need of some rain,” said Keith Ferley of RBC Dominion Securities in Winnipeg, noting temperatures were topping 30 C across many canola-growing areas of Western Canada. Conditions were highly varied, he added, with the acreage base still a question as well.
While the uncertain Canadian crop situation is supportive, he added that the large soybean crop will limit the weather-related upside potential in canola, keeping futures choppy and rangebound.
From a technical standpoint, November canola sees support at the contract low of $429, with support coming in at $440 and again at $450, said Ferley.
“The market just seems to be stuck within a $20 range of $430 to $450, and traders seem to be content with that right now.”
Fund traders are holding a large short position, and could come forward to cover those shorts, but would need an outside catalyst such as a bounce in soybeans or movements on the geopolitical front.
On the other side, farmers are “the big long in here” with large amounts of unpriced canola still needing to be sold, according to Ferley.
— Phil Franz-Warkentin writes for Commodity News Service Canada, a Winnipeg company specializing in grain and commodity market reporting.