CNS Canada — ICE’s November canola futures look poised to continue chopping around between the $490-$500 per tonne mark, as uncertainty over yields in Western Canada sows seeds of doubt throughout the trade.
“Yields that have been coming in suggest the crop will be bigger than the (Statistics Canada) estimate,” said Ken Ball of PI Financial.
StatsCan on Aug. 31 released a production forecast in which it pegged Canada’s canola crop at 19.2 million tonnes.
Reports suggest yields in the southern Prairies, where rainfall was extremely limited, will be worse than in the north. At this early stage it is tough for traders to get an exact handle on what the overall counts will be.
“In Alberta not even 20 per cent of the crop has been harvested,” said Ball.
Cold and wet weather in has kept farmers off combines in Alberta’s Peace region, but next week the weather is expected to turn warmer.
“As long as it stops raining guys will get out there and get their canola off,” said Keith Ferley of RBC Dominion Securities. “However, there are worries about downgrading.”
The U.S. Department of Agriculture on Wednesday released its production estimate for the U.S. soybean crop, in which it hiked the forecast to 4.7 billion bushels. It also hiked ending stocks by 60 million bushels to 845 million, which cast a gloomy outlook on the oilseed market in general.
According to Ball, though, the biggest factor facing canola traders these days is the unknown size of the Canadian crop.
“There’s still a long way to go for harvest and it will be a challenge for a while longer to get an assessment on the crop,” he said.
Strength in the Canadian dollar has also put pressure on canola, which was already dealing with a recent slump in soyoil prices.
— Dave Sims writes for Commodity News Service Canada, a Glacier FarmMedia company specializing in grain and commodity market reporting.