ICE weekly outlook: Late canola crop hinges on weather

MarketsFarm — The ICE Futures canola market held within a narrow range during the week ended Wednesday, with weather conditions heading into harvest likely to dictate the eventual price direction over the next few weeks.

“The key right now is the late state of the crop,” said Errol Anderson of ProMarket Communications in Calgary, noting canola development appears to be about two weeks behind normal across most of the Prairies.

“The harvest won’t start until September or mid-September, so if Mother Nature cooperates, great, but the market will be on alert… and we’re definitely still in a weather market,” he said.

He placed the November contract in a range between $780 and $900 per tonne, with an early frost or support from elsewhere likely to take prices to the top end while benign weather would weigh on the other side.

In the background, Anderson noted farmers are very lightly priced with new-crop canola after last year’s drought. That could lead to heavier-than-normal selling pressure at harvest time.

Activity in currency markets, with the Canadian dollar strengthening relative to the U.S. dollar, is also slightly bearish for canola — “but the weather is the superior factor,” he said.

— Phil Franz-Warkentin reports for MarketsFarm from Winnipeg.