ICE canola outlook: Upside unknown given geopolitical risks
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Glacier FarmMedia — Canola futures climbed higher during the week ended March 11, finding spillover support from advances in crude oil due to the escalating conflict in Iran and surrounding countries.
May canola settled at C$733.30 per tonne on March 11, having climbed by more than C$30 since the start of the war on Feb. 28.
The futures are “being dominated by what’s happening in the Middle East,” said Lawrence Klusa of Seges Markets in Winnipeg.
While an uptrend remains in place from a chart perspective, Klusa cautioned that picking a top under the current environment was difficult given the unpredictable geopolitics.
He expected the latest rally in canola could lead to some shift in seeding plans, and recommended farmers lock in some new crop pricing.
However, planted area could also change depending on fertilizer availability. Roughly a third of the world’s fertilizer trade passes through the Strait of Hormuz, and its closure has sent prices climbing higher. Farmers may have already pre-booked fertilizer, but Klusa questioned if everything will be delivered.
“It will be an interesting year,” said Klusa, adding that weather conditions through the growing season will also become more important in the months ahead.
