CNS Canada — ICE Futures Canada canola contracts continue to chop around in a narrow range these days, as the trade waits for the market to break one way or another.
Canada and China recently agreed on rules over dockage that will see shipments of canola accepted at Chinese ports as long as they don’t have foreign materials in excess of 2.5 per cent.
This is good news, said Mike Jubinville of ProFarmer Canada in Winnipeg, but the market wants to see how much canola China actually buys before it starts to relax.
“I think it opens the door for a big export program to China but we’re still waiting for that first piece of business to get done,” he said.
The question of how much canola is actually out there is also keeping some traders on the sidelines, as evidenced by relatively light volumes in recent days.
Statistics Canada recently pegged the country’s canola production, using a satellite-based modelling system, at 18.3 million tonnes. While many investors shrugged off the guess, it still rankled some who feel even more canola may still be out there.
“We’re lower right now but I still view this (in the broader context) as a sideways trending market,” Jubinville added.
Harvest pressure is steady in Saskatchewan and Manitoba, while Alberta continues to fight its way out of soggy fields. This should limit the upside to a certain extent, said Jubinville.
The range, he said, is “November $477 (per tonne) on the upside, $450 per tonne on the bottom side. That is it until further notice.”
At the same time there are bullish indicators keeping the market supported, despite the bearish scene.
Demand is strong and crush pace is at all-time record levels for this very early time of the year in the new-crop marketing season, Jubinville said.
During the week ended Wednesday, the front-month November contract was unchanged while the January contract finished 60 cents higher.
— Dave Sims writes for Commodity News Service Canada, a Winnipeg company specializing in grain and commodity market reporting.