ICE weekly outlook: Rising canola watching weather

CNS Canada –– ICE Futures Canada canola contracts moved higher during the week ended Wednesday, as weather concerns mounted across the Canadian Prairies.

While it’s still early in the Canadian planting season, persistent cool and wet conditions in many areas could lead to delays, said Mike Jubinville of ProFarmer Canada.

Uncertainty over how much canola is still in the fields from 2016, and what will happen to it, is also lending support to canola, he added.

Concerns over tightening old-crop supplies remain somewhat supportive for canola as well, as both export and domestic crusher demand continue at a solid pace.

However, Jubinville said, actual old-crop supplies may be higher than the official numbers suggest.

Statistics Canada will release its latest stocks report on May 5, showing how much canola was on farms and in commercial positions as of March 31.

The report does not typically cause much market movement, but will provide a clearer picture of usage to date.

While the futures posted large advances over the past month, basis levels have held reasonably steady, which Jubinville saw as a supportive sign. One ‘canary in the coal mine’ signaling an end to the rally in canola will be when basis levels start to widen, he said.

In addition, from a chart standpoint, he said the $530-$540 per tonne level would provide significant resistance for July canola.

Without a crop disaster somewhere in the world, he expected the futures would be hard pressed to move above that.

The relatively bearish outlook for U.S. soybeans is also overhanging canola, according to Jubinville.

— Phil Franz-Warkentin writes for Commodity News Service Canada, a Winnipeg company specializing in grain and commodity market reporting.