MarketsFarm — ICE Futures canola contracts fell to their lowest levels in five months in early July, but may be finally finding some support as the selloff shows signs of running out of steam.
The most-active November contract dipped below the $800 per tonne level on Tuesday and Wednesday — but ended above that psychological chart point both days to settle at $825.30.
The relative stability shown by the canola market in the face of heavier selling in Chicago soyoil was tied in part to gains in European rapeseed on Wednesday, according to Ken Ball of PI Financial.
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While canola crush margins “have taken a beating,” he said, they were still solid overall, with recent weakness in the Canadian dollar another supportive influence.
Farmer selling has also backed away after the initial declines, but Ball expected it would pick back up again on any corrections back toward the $900 per tonne level.
“People are being forced to pay a lot closer attention than they were a month ago,” he said.
He expected canola may be able to stabilize around current levels if U.S. markets don’t deteriorate further themselves.
Weather conditions through the growing season will also be followed closely. While there are some problem areas across the Prairies, early expectations are for a considerable improvement in canola production after last year’s drought. Ball noted that Australia’s canola crop was also shaping up to be large.
— Phil Franz-Warkentin reports for MarketsFarm from Winnipeg.
