Glacier FarmMedia – The ICE Futures canola market remained under pressure heading into the New Year, lacking any significant supportive news of its own that could spark a move higher.
“We have a fundamental picture in canola that looks reasonably comfortable as far as supply goes – there’s no great pressures,” said Ken Ball of PI Financial in Winnipeg, adding that the oilseed will need support from outside markets to move higher “and for now it’s just not getting it.”
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While the domestic crush is running ahead of the year-ago pace, that may be contributing to softness in the United States soyoil market as more Canadian canola oil moves into the U.S. market, according to Ball.
The January canola contract traded just under C$650 per tonne a week ago before finding some support to move back towards the C$660 per tonne area on Dec. 13. However, from a chart standpoint, Ball expected values could dip to C$625 and added that “even going below C$600 wouldn’t be a surprise unless we get some support from the U.S. markets.”
South American growing conditions should be a major price driver in the soy market over the next few months. While parts of Brazil are struggling, Ball said the weather was looking reasonably favourable in Argentina with larger South American production on the year expected.
“It’s a complicated environment in the oilseeds right now… but for the moment the bias (in canola) is leaning to the downside,” said Ball.
— Phil Franz-Warkentin is an associate editor/analyst with MarketsFarm in Winnipeg.
