MarketsFarm — ICE Futures canola contracts fell to their lowest levels in a month during the week ended Wednesday as much-needed moisture also fell across much of Western Canada.
While there are still plenty of areas of concern, the rain has taken some of the weather premium out of the market, said Jonathon Driedger of FarmLink Marketing Solutions.
In addition to the improving moisture situation, canola was also pressured by the ongoing diplomatic dispute with China.
News of China stopping imports of Canadian meat “puts an additional exclamation mark on our issues with that country, and we’re probably not optimistic of a resolution anytime soon based on the tone,” said Driedger.
“For the time being weather and politics are dominating,” said Mike Jubinville of MarketsFarm Pro. He estimated reduced yields in the problem areas of the Prairies would be countered by better conditions elsewhere, keeping yields close to trend lines.
Statistics Canada released updated acreage estimates, pegging the 2019-20 canola crop at 20.951 million acres. That would be down by nearly two million acres from the previous year, and in line with trade estimates.
Jubinville expected crop abandonment would also be down from normal, but with average yields and a continued lack of exports to China, total supplies will still be large.
“The little tweak in acres is a non-factor in the grand scheme of things,” Driedger said, adding “at the end of the day, yields matter a whole lot more than a few acres here and there.”
— Phil Franz-Warkentin writes for MarketsFarm, a Glacier FarmMedia division specializing in grain and commodity market analysis and reporting.