ICE weekly outlook: Canola holds rangebound with bearish StatsCan data

ice futures canada
(Dave Bedard photo)

CNS Canada — Canola contracts on the ICE Futures Canada complex stayed mostly rangebound during the week ended Wednesday, even as sharp fluctuations in the Canadian dollar and a bearish Statistics Canada report impacted the market.

StatsCan on Wednesday released its final production estimates of the year, projecting canola production in 2017-18 at 21.3 million tonnes, higher than what most analysts had predicted. It also surpassed last year’s total of 19.6 million, a record at the time.

The market fell a few dollars on the day but held rangebound overall.

Mike Jubinville of ProFarmer Canada said he thinks canola will look to its usual fundamental drivers in the days ahead.

“I think we’re going to be driven by the combo of veg oil and the Canadian dollar,” he said.

The loonie also had a week to remember, rising one cent Friday against its U.S. counterpart, which cut significantly into crush margins.

It then fell Wednesday by over half a cent, helping keep contracts supported as the impact of the StatsCan report washed over the market.

Heading into the report, Jubinville said, he had support for the January contract pegged at $500-$505 per tonne and resistance at $520.

Despite a larger-than-expected forecast for canola supplies, he sees little reason for futures to break out of their range.

“I don’t see us changing from rangebound trends in the market unless veg oil really breaks down,” he said.

Another analyst, Ken Ball of PI Financial, said there is a chance canola could drift lower and lose some of its premium.

“It has been expensive recently,” he said, “so crushers may back off on their crush spreads.”

— 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.

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