ICE weekly outlook: Don’t bank on $700 canola, analyst suggests

Fresh bullish news not yet in view

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Published: May 25, 2023

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ICE November 2023 canola with Bollinger bands (20,2) and July 2023 canola (green line). (Barchart)

MarketsFarm — New-crop canola prices on ICE Futures seemed to be destined to remain well below $700 per tonne, according to analyst Errol Anderson of ProMarket Communications in Calgary.

“The market tends to be back where it came from,” Anderson said, stressing that chances of canola pushing higher requires fresh bullish news. “It’s got to have a reason to recover.”

“To me it has to come from the demand side, not the supply side. It has to be the buyer stepping forward.”

Otherwise, Anderson said, the November contract could fall back to as low as $620/tonne, although the current support level is at $650.

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“Technically we are oversold,” he said, adding that the ‘new Cold War’ between the U.S. and China isn’t helping any of the markets.

China has been cutting its soymeal purchases, switching to feed wheat as it’s cheaper, he said. In turn, that’s seen soymeal prices on the Chicago Board of Trade (CBOT) take a hard hit.

Another element in keeping canola prices under $700 is the price of crude oil. Anderson said he doesn’t believe the hype of crude rising toward US$100 per barrel; rather he said it’s going to remain at US$50-$60. Without spillover from strong crude prices, there would be insufficient support for any vegetable oils to rise by a great measure.

— Glen Hallick reports for MarketsFarm from Winnipeg.

About the author

Glen Hallick

Glen Hallick

Reporter

Glen Hallick grew up in rural Manitoba near Starbuck, where his family farmed. Glen has a degree in political studies from the University of Manitoba and studied creative communications at Red River College. Before joining Glacier FarmMedia, Glen was an award-winning reporter and editor with several community newspapers and group editor for the Interlake Publishing Group. Glen is an avid history buff and enjoys following politics.

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