Glacier FarmMedia COVID-19 & the Farm

ICE weekly outlook: Quiet winter has canola steadying

march canola
ICE March 2019 canola with Bollinger (20,2) bands. (Barchart)

CNS Canada — The ICE Futures canola market is expected to stabilize now as there isn’t really any big news to drive North American oilseed markets.

“We don’t have something very dominant for traders to focus on and supplies are pretty comfortable everywhere in the oilseed complex for now… the only factor that has hurt canola a little bit has been the Canadian dollar,” said Ken Ball of PI Financial in Winnipeg, adding the recent rally in the dollar pressured canola contracts.

The winter season usually is a quieter time of year for the grain trade — and of late it has been quieter than usual.

In the U.S., a partial government shutdown has delayed the release of most U.S. Department of Agriculture (USDA) reports, which has left traders of the soy complex with not much to go on.

In Canada, while the usual information has still made its way out of sources such as the Canadian Grain Commission, there has been little data to be supportive for the market.

Traders had been hoping canola usage would pick up and bring down canola stocks, but that hasn’t been the case, Ball said.

“It’s not clear that’s going to happen now, so it looks like supplies are going to remain relatively comfortable.”

Instead, canola has been finding itself choppy and pushed around by outside forces — mainly the value of the dollar.

Lately, Ball said, canola has also found itself independently weak from the soy complex — due to speculative trading, he suspects.

“So speculators may be pressing it or again it could be speculative spreaders that are pressing it a little bit at times,” he said.

Heading into the next week, Ball suspects the canola market has stabilized as the stronger Canadian dollar has been priced into contracts and shouldn’t influence the market as much as before.

“None of the markets are showing big strong directions. They’re all really just chopping around in ranges, moving mostly sideways. And then canola will, too, I think, once you take the dollar affect away a little bit, it should start to just chop around sideways again.”

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

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