Winnipeg (CNS Canada) – ICE Futures Canada canola contracts moved lower during the week ended July 26, as improving weather conditions in parts of Western Canada and the US Midwest saw speculators liquidating some of their long positions.
While the nearby charts turned bearish, canola rebounded off of its lows on Wednesday taking some direction from activity in the Chicago Board of Trade soy complex.
“August is the most important month for bean yields, and we have lots more to go here,” said Jamie Wilton, commodity futures specialist with R.J. O’Brien in Winnipeg, adding that where soybeans go, canola will likely follow.
Read Also
U.S. grains: Corn futures edge up, soybeans sag on improving US crop ratings
Chicago Board of Trade corn futures extended slight gains on Tuesday as short covering and bargain buying continued to support a rebound from contract lows reached during the previous session.
Canola has a tighter supply situation than soybeans, which should provide canola with some strength relative to soybeans if better Midwestern weather sees the US futures move lower. However, “end users aren’t too anxious to do a lot at the moment,” added Wilton.
“It’s looking like canola will have to do a one to two million tonne rationing job this year,” said Ken Ball, of PI Financial in Winnipeg. “Fifty per cent of the Prairies is getting reasonably good weather, but the other half isn’t,” he added noting that the market is having difficulties coming up with a rough yield estimate on the crop.
