MarketsFarm — ICE Futures canola contracts moved higher during the week ended Wednesday, with the largest gains in the old-crop months amid ongoing concerns over tight supplies.

Day-to-day activity could remain volatile at times, but underlying fundamentals should remain supportive heading into the 2021 growing season, according to an analyst.

While canola futures have traded in wide price ranges in recent sessions, “fundamentally, demand remains quite strong… and it’s projecting an extraordinarily tight ending stocks situation,” MarketsFarm Pro analyst Mike Jubinville said.

“While the day-to-day action can swing pretty wildly, that doesn’t change the fundamental dynamic that we’re running out of canola,” he added.

Jubinville noted the commercial buying interest would eventually move to the new crop, but that was still in its early stages. During that switch from old-crop to new-crop, the players still remaining trading the front months become smaller and smaller, increasing the volatility.

“The market doesn’t have to be up every day, but there are limitations to the downside,” he said.

As attention turns to the new crop, dry conditions across much of the Prairies will make weather through the growing season an important factor to watch.

In addition, Jubinville said seeded canola area might not see much of an increase on the year, due to agronomic issues and strong prices for most other cropping options.

— Phil Franz-Warkentin reports for MarketsFarm from Winnipeg.

Tagged acres, Canola, ending stocks, futures, ICE, ICE Futures, new-crop, old-crop, prairies, seeding, volatility