CNS Canada — ICE Futures Canada canola contracts appear poised to chop around a new $20 trading range ahead of the harvest.
The front-month canola contract had been down at $446 per tonne to start the week (Aug. 3-10) until speculator activity and spillover gains from vegetable oil helped bring it up to the $460 per tonne range.
“I think we’re sort of in a trading range right here; $450 to $470 is where I think we’re going to be for a while,” said Bill Craddock, a trader and farmer in Winnipeg.
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He and other traders have their eyes on this week’s world agricultural supply and demand estimates (WASDE) report, compiled by the U.S. Department of Agriculture. The report is due out on Friday and generally expected to increase the forecast for the U.S. soybean crop.
“There should be a downside (in the canola market) because I think they’re going to come out with big (soybean) numbers,” he said, adding “but I think we’ll get over those sorts of things very quickly.”
Once the report has been digested by the market, Craddock said, contract prices will likely chop around within their newfound range, barring any major weather problems.
“I think you’ll see the market firm up after that,” he said.
The crush rate should also continue to churn along if exports keep at their current pace.
“Crush margins are very good. So the crushers aren’t going to pull back there,” said Craddock.
On Sept. 1, China is scheduled to tighten its dockage requirements for imports of Canadian canola.
Some traders have said they think the issue is starting to crimp the canola market, but Craddock said it’s likely not a big deal yet.
“I’m not sure it’s as big an issue as its being made out to be. China may just be using this to slow down (oilseed) imports,” he said.
— Dave Sims writes for Commodity News Service Canada, a Winnipeg company specializing in grain and commodity market reporting.
