CNS Canada — The ICE Futures Canada canola market declined on the week, and those losses are likely to continue, one Winnipeg-based analyst says.
“This is going to be dominated by yesterday’s reversal in the canola, and the weather,” said Ken Ball of PI Financial Corp.
Canola on Tuesday lost between $8 and $9 in front contracts, which shifted the market’s technical bias to the downside.
“Canola could lose a lot of ground if we happen to get lucky for a couple weeks with the weather,” Ball said.
Recent forecasts from Environment Canada show warmer temperatures with limited precipitation in Western Canada over the next week, which may allow producers to get into their fields to finish harvesting the remainder of the crop.
If that happens, there will likely be an influx of producer-selling, which is bearish, Ball said.
“That’s going to hit the market pretty fast, you don’t want to start to dry down and store the canola that’s been sitting there as long as it has,” he said.
However, Ball noted, some fields may still be too wet for farmers to get into, and at this time of year forecasts can change quickly, which could limit the downside in the market.
If the Chicago Board of Trade soybean market stays weak it will also add spillover pressure to canola, Ball said.
“The soy situation is likely to remain fairly subdued. If anything, the soy situation will probably be pulling canola down.”
The advancing U.S. harvest is keeping a lid on the oilseed, with producers bringing in a big supply.
Since last week, canola prices have lost $2.40 in the January contract, closing at $515.80 on Wednesday.
— Jade Markus writes for Commodity News Service Canada, a Winnipeg company specializing in grain and commodity market reporting.Tagged canola futures, canola market, harvesting, ICE Futures Canada