ICE weekly outlook: Bare shelves keep all eyes on weather

ICE July 2021 canola (candlesticks) with CBOT July 2021 soybeans (gold line). (Barchart)

MarketsFarm — Hot and dry Prairie growing conditions helped ICE Futures canola contracts move higher to start the month of June, with weather forecasts likely to dictate where values move over the next few weeks.

“We’re going into some very hot temperatures, and we’ll need another dose of rain in a week or two to calm the market down,” analyst Errol Anderson of Pro Market Communications in Calgary said.

“The shelves are bare, so the market is very reactionary,” Anderson added, noting large amounts of speculative money in the market were leading to wide price swings.

Dry conditions should remain supportive, he said, but the whims of the speculative fund traders could lead to surprises.

Looking beyond the weather, the soybean market in the U.S. was showing a head-and-shoulders chart formation, which could suggest the soybean market was topping out.

Moisture conditions in the U.S. also look better than in Canada, and Anderson felt there was a risk that soybeans will trend lower.

While soybeans may go down, he expected vegetable oil sector would remain strong overall and keep canola underpinned.

— Phil Franz-Warkentin reports for MarketsFarm from Winnipeg.

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