Glacier FarmMedia COVID-19 & the Farm

ICE weekly outlook: Canola waits for U.S. shutdown to end

march canola
ICE March 2019 canola with 20-day moving average. (Barchart)

CNS Canada — The ICE Futures canola market, like its fellow commodity markets, currently sits at the mercy of the U.S. government shutdown, according to one analyst.

“It all has to do with the government shutdown in the States. Soybeans keep on rallying, than they lose ground towards the end of the session, because how many cargoes of Chinese beans the U.S. has taken,” said Wayne Palmer, analyst with Exceed Grain.

“As long as beans rally, everything else is going to rally with it, including canola.”

The U.S. government has been shut down since Dec. 22, when U.S. President Donald Trump refused to sign a spending bill in an impasse over his demands for funding for a U.S./Mexico border wall.

Since then, various federal government departments, including the U.S. Department of Agriculture (USDA), have been partially shut down. During the shutdown, USDA has not released export sales data, among other reports.

This means that while the oilseed trade suspects China has been purchasing U.S. soybeans there is no confirmation it has happened.

According to Palmer, the soybean market has been building itself up on the thought the purchases have happened. However, once the shutdown ends and the data is released, if that isn’t the case, the market will fall.

“It’s just dull markets, just waiting to see. Like this is the one time no news is good news,” he said.

The canola market is playing follow-the-leader with the soybean market, awaiting news. There has also been a lack of farmer selling for canola due to the recent cold snap on the Prairies over the holidays. Palmer suspects farmers will continue not to sell for the foreseeable future.

“I think the farmer actually is cash-adequate probably right into the middle of February… he was able to get about $11 for his canola and I think most of the farmers did enough pre-selling in order to carry them through to almost the end of winter,” he said.

Unless something really unforeseen happens, the canola market can’t go down any further, he added.

The only movement in the market currently has come from funds, according to Palmer.

“Right now the only one who is going to sell it is funds. But it has to be a technical reaction and the only time they’re going to sell it is on down markets,” he said.

— Ashley Robinson writes for Commodity News Service Canada, a Glacier FarmMedia company specializing in grain and commodity market reporting.

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