ICE weekly outlook: Farmers advised to price some new crop

nov 2019 canola
ICE November 2019 canola with 20- and 100-day moving averages. (Barchart)

ICE Futures canola contracts held within a narrow trading range during the week ended Wednesday, as participants await fresh market-moving news.

While the sideways trading range could persist in the near term, an analyst said new-crop futures were at decent levels and encouraged farmers to do some forward pricing.

The November canola contract settled Wednesday at $498.10 per tonne, while January traded at $502.30.

While average basis levels for new-crop canola of $35-$40 per tonne below the futures are not that great, “we don’t want to see this $500 level disappear on us,” said commodity investments advisor David Derwin of PI Financial.

Derwin recommended growers price some of the 2019-20 crop now, and worry about the basis later.

Old-crop basis levels are a bit more favourable, but they’re still wider than farmers would like to see. Derwin said $11 per bushel ($485 per tonne) was a cash target many growers were likely looking at.

However, current basis levels in the $15-$20 per tonne range below the futures work out to cash bids of $10.50-$10.65 per bushel.

The U.S. Department of Agriculture releases a number of supply/demand reports on Friday. Any surprises in those reports, and resulting moves in soybeans, could provide some nearby direction for the canola market.

— Phil Franz-Warkentin writes for MarketsFarm, a Glacier FarmMedia division specializing in grain and commodity market analysis and reporting.

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