ICE weekly outlook: Upside limited for canola’s snow boost

ICE Futures November 2019 canola, with 20-, 50- and 100-day moving averages. (Barchart)

MarketsFarm — An unwelcomed early winter storm sent ICE Futures canola contracts higher during the week ended Wednesday, but it will take outside support to sustain a rally, according to industry participants.

Snow in Alberta and Saskatchewan and cool and wet conditions in Manitoba slowed harvest operations during the week, with about 60 per cent of the country’s canola crop still in the fields, according to market analyst Wayne Palmer of Exceed Grain Marketing.

Palmer estimated it would be another seven to 10 days before the harvest resumes, which will support prices and limit farmer selling for the time being.

Commodity fund short-covering accounted for much of the strength in canola during the week, according to Palmer. However, commercial end-users were less reluctant to bid up the market, given the large old-crop carry-in and ongoing diplomatic dispute between Canada and China.

“We won’t run out of canola anytime soon, unless we solve this China thing,” said Palmer.

“There’s no real panic yet that the crop won’t come off; it will just likely come off a little later than we’d hoped,” said broker Keith Ferley of Dominion Securities.

Both Ferley and Palmer said canola would be hard pressed to keep moving higher on Canadian weather concerns alone without spillover support from the Chicago Board of Trade soy complex.

“You need to keep a rally going in the beans for canola to go up,” said Ferley.

— Phil Franz-Warkentin reports for MarketsFarm, a Glacier FarmMedia division specializing in grain and commodity market analysis and reporting.

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