MarketsFarm — The ICE Futures canola market tested major chart support during the week ended Wednesday, but could be due for some choppy activity and eventual strength over the next few weeks, depending on what happens with the weather and in U.S. corn and soybean markets.
The canola crop looks good across much of Alberta and Manitoba, but is still in trouble in many areas of Saskatchewan, according to analyst Wayne Palmer of Exceed Grain Marketing.
While shifting Prairie weather forecasts will provide some direction for canola, he expected the bigger influence would come from Chicago soybeans and corn.
The U.S. Department of Agriculture on Aug. 12 will release revised acreage numbers, which are widely expected to be bullish for corn.
Traders were showing a reluctance to put positions on ahead of the August USDA report, according to Palmer. While the soybean numbers may be bearish, the general bullishness in corn should take the oilseeds up as well.
“We think the prices on the board right now will be low come harvest time,” said Palmer. Corn will be the driver, he added, but short-covering in soybeans and canola should keep them supported as well.
While an old grain marketing adage is that ‘big crops get bigger,’ Palmer noted the same can be said of small crops getting smaller.
— Phil Franz-Warkentin writes for MarketsFarm, a Glacier FarmMedia division specializing in grain and commodity market analysis and reporting.