ICE weekly outlook: Canola rangebound at harvest time

CNS Canada — ICE Futures Canada canola futures remain stuck in a rather narrow range, with seasonal harvest pressure weighing on the one side while solid demand provides support on the other side.

“We’ve been in a sideways trading environment for 2-1/2 years, and I don’t see that changing,” said Mike Jubinville of ProFarmer Canada.

He placed the nearby November contract in a $25 range from $490 to $515, with the wider $460-$540 range the “all-encompassing range of the past two years.”

Jubinville expected the nearby bias to be to the downside, as seasonal harvest pressure weighs on prices. However, he said, old-crop supplies are tight, which should see a bounce back to the upper end of the range following the harvest.

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“If you think it was very tight last year and you need every single bushel that’s coming this year, then prices should be, at worse neutral, but probably should be appreciating,” said Neil Townsend of FarmLink Marketing, on the mentality of end-use buyers.

Townsend said he was unsure where the futures would be headed, as there are other factors at play outside of the direct supply/demand fundamentals, but added that cash bids in the countryside have room for improvement.

The futures were underpriced, he said, noting “canola is a strong buy at $500 (per tonne).”

However, activity in the Canadian dollar is one background factor that could sway the market. The currency rose sharply on Wednesday following a move by the Bank of Canada to increase interest rates.

— Phil Franz-Warkentin writes for Commodity News Service Canada, a Winnipeg company specializing in grain and commodity market reporting. Follow him at @PhilFW on Twitter.

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