Glacier FarmMedia—Canola futures at the Intercontinental Exchange (ICE) rose to their highest levels of 2024 during the week ended May 22.
The July canola contract peaked at C$672.20 per tonne on May 22 before ending the day C$665.60. However, the contract still gained C$16.30/tonne for the week. Meanwhile, the November contract rose as high as C$693.50 before closing at C$687.80 for a weekly gain of C$18.50.
David Derwin of PI Financial in Winnipeg identified multiple factors contributing to canola’s recent rise, including funds covering their net short positions and seasonal strength.
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“Canola had been going down for six to nine months coming (down) from last summer’s highs. Some of that just making back that ground and it could still be that situation,” he said, adding that spillover from the Chicago soy complex and weather issues in South America were also bringing support.
“Soybeans have come up a good US$1 per bushel from their lows. That is causing some buying in canola as well,” he said. “We could still have strength going on for the next month or so.”
While canola appeared to be following the lead of Chicago soyoil in the short-term, Derwin believes that canola is actually taking cues from soymeal price movement.
Recent rains on the Prairies have created a situation where moisture can pressure canola prices, but delayed planting can also support them. It’s anyone’s guess how this summer will shape up, according to Derwin.
“You talk to so many people across the Prairies and (everyone’s opinion) is so different that there’s not necessarily an underlying factor,” he said. “But people have got their canola in the ground and yet it’s cool, so there’s been concern over frost because of how cool it’s getting at night … The weather plays a factor, for sure.”
New crop canola reaching the C$700/tonne mark is not out of the question, Derwin said, believing it can go even higher.
“Even a stretch where it can get to C$720 or C$725 would be equal to C$16 per bushel. There’s a little bit of room yet,” he added.
