Glacier FarmMedia | MarketsFarm — The ICE Futures canola market climbed off nearby lows over the week ended Dec. 4, although the correction ran into resistance and values remain at the whim of outside forces.
“It’s all politics,” said MarketsFarm analyst Mike Jubinville on the factors moving the canola market. In addition to the threat of tariffs from the United States on all Canadian imports, uncertainty over U.S. biofuel policy under Donald Trump was also keeping some caution in the markets. Over 90 per cent of Canada’s canola oil exports are currently destined for the U.S., with much of that used in the production of biodiesel.
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The possibility of a trade dispute with China, the largest export customer for Canadian canola seed, is also still overhanging the market.
However, the fundamentals for canola remain supportive. Jubinville noted that Canadian canola is trading at a large discount to European rapeseed, which should be encouraging more European buying interest.
Updated production estimates from Statistics Canada on Dec. 5 could provide some nearby direction for canola, although barring a major surprise Jubinville expected any market reaction to the data would be short-lived.
Average trade guesses call for a cut to the 18.98 million tonne-crop forecast in September, with some analysts of the opinion production was below 18 million tonnes. However, there are also a few calls for a steady to higher reading, which would be bearish.
