ICE weekly outlook: Rain needed to bolster canola crop

ICE November 2021 canola with 20-, 50- and 100-day moving averages. (Barchart)

MarketsFarm | Rain — specifically, the lack thereof — is quickly becoming the key issue for canola values, according to Ken Ball of PI Financial in Winnipeg.

Until now, dry conditions across much of the Prairies have not been much a factor in canola prices, he said.

“We’ve got to get some rain in a part of the Prairies in the next couple of weeks.”

Without sufficient precipitation, canola and other seeded crops will have great difficulty germinating, as topsoil become increasingly drier. The Manitoba crop report noted there already has been soil drifting in that province.

At stake is the amount of canola to be produced in 2021-22. Projections from Statistics Canada’s latest report called for a 3.6 per cent increase in the amount of canola seeded, at 21.53 million acres.

However, the trade was uncertain if that would translate into enough production to take the pressure off of tight supplies.

Wednesday’s world agricultural supply and demand estimates (WASDE) from the U.S. Department of Agriculture forecast Canadian canola production in 2021-22 to be 20.5 million tonnes.

Meanwhile, Ball previously suggested there could be farmers turning away from the Canadian oilseed, as they would be unwilling to gamble on the crop in such dry conditions. That would then lead to a reduced amount of canola seeded, thus less production.

“We’re going to be in some trouble if we don’t get rain by early June,” Ball said.

— Glen Hallick reports for MarketsFarm from Winnipeg.

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