ICE Canola Futures Climb As Wet Weather Concerns Grow

Precipitation late last week and into the weekend caused further damage to some regions that were still hanging on to some decent crop expectations, particularly in the very productive southeast Saskatchewan and western Manitoba regions, brokers said. The area in southwestern Saskatchewan and southeastern Alberta is now quite troubled as well as that area received another dose of heavy rain with flooding issues all over the news this weekend.

Weather outlooks early Monday show mixed sunny days and possible showers around, with temperatures seasonal to warm in all areas. For almost two-thirds of the Canadian Prairies, any showers this week will create further difficulties, traders said.

Market participants feel that considerable damage to Western Canada’s crop potential has been done, with an estimated 30% of productive capacity wiped out, maybe more. Traders said as a result canola needs to hold firm in order to ration off a notable portion of the demand anticipated over the next year.

The higher calls for CBOT soybean futures with the start of the North American day session and the gains seen overnight in e-CBOT soybean futures were helping to keep a firm floor under canola.

Stronger EU rapeseed and Malaysian palm oil futures overnight were also secondary sources of support for canola futures.

Steady domestic processor demand and the pricing of old export business to Japan was also helping to fuel some of the upward price momentum.

The absence of farmer selling given the crop uncertainty was also influencing some of the support in canola.

Firmness in the Canadian dollar and technical resistance were seen slowing the upward price movement, brokers said.

Some position evening ahead of Wednesday’s updated acreage survey from Statistics Canada was anticipated.

As of 9:25 am EDT, there were 700 canola contracts traded.

As of 9:25 am EDT, no western barley contracts had been traded.