MarketsFarm — The ICE Futures canola market posted gains for the first time in more than a week on Wednesday, but damage was done from a chart standpoint with mounting harvest pressure amid relatively favourable Prairie weather conditions likely to weigh on values over the next few weeks.
“It’s that time of year,” said Jamie Wilton of R.J. O’Brien in Winnipeg, on the seasonal declines in canola, adding that a lack of demand was contributing to the softness.
While domestic crush margins remain wide, canola is still overpriced for exporters, according to Wilton. He pointed out Canadian canola was trading at US$90 per tonne over European rapeseed and US$80 per tonne over soybeans from the United States.
Read Also
USDA adjusts supply/demand estimates
Corn and soybean yields in the United States were left unchanged in the latest supply/demand estimates from the U.S. Department of Agriculture, released July 11, although a reduction in harvested area led to small downward revisions to production for the crops.
From a chart standpoint, after the move below $760 per tonne in the November contract, Wilton placed the next level of support at a retracement level around $725 per tonne.
The release of Statistics Canada’s next production report could provide some nearby direction. However, Wilton expected the report was unlikely to sway the market too far one way or the other, as it will be based off satellite images and computer models, with survey-based data not out until December.
— Phil Franz-Warkentin is an associate editor/analyst with MarketsFarm in Winnipeg.
