CNS Canada — ICE Futures Canada canola contracts finally broke through the psychologically-important $500 per tonne mark during the week ended Wednesday.
That could be a fleeting achievement, however, depending on the chances for rainfall in Argentina and the next U.S. Department of Agriculture report.
“If rain comes, soybeans could go down to US$9.60 a bushel and that would take the crushers out of the market,” said Wayne Palmer of Agri-Trend in Winnipeg. “Many people will take safe positions until Monday morning.”
Already, production estimates for Argentina have been lowered by a few million tonnes and could drop further if the rain doesn’t arrive in sufficient amounts.
USDA is scheduled to release its monthly supply and demand report on Thursday. Analysts expect the agency will raise the soybean carryout in the U.S. There are also ideas Brazil’s production estimates will be hiked slightly. World ending stocks could go down by a slight amount.
Whatever the case, a trader in the city doubts it will truly impact canola’s direction on the market.
“I can’t see it changing anything much,” said Bill Craddock, who also farms near Winnipeg.
Farmer deliveries are down significantly from before Christmas, he noted, which has taken supplies off the market.
“Crushers aren’t making gobs of money but they’re still making money so they’ll continue to push their systems to the max,” he added. “There’s lots of canola out there.”
For Palmer, it all comes down to this week’s rainfall in Argentina and how the funds react.
“The funds are spooked,” he said. “If they don’t get this rain, look out for the next report.”
— Dave Sims writes for Commodity News Service Canada, a Glacier FarmMedia company specializing in grain and commodity market reporting. Follow CNS Canada at @CNSCanada on Twitter.