ICE weekly outlook: Canola climbs despite harvest pressure

CNS Canada –– ICE Futures Canada canola contracts finished higher for the week ended Wednesday, posting gains of $9-$10 per tonne despite mounting harvest pressure and large world supplies of vegetable oil.

The slumping Canadian dollar, which momentarily reached its lowest point in 11 years during the session, has been a big reason behind canola’s upward momentum. Support also came from commercial buying interest.

The most-frequently traded November contract pushed up against the key resistance point of $480 per tonne, four sessions in a row, according to analyst Ken Ball of PI Financial in Winnipeg.

“The fact it’s coming up a fourth time shows there’s been some resilience to this market,” he said in an interview on Wednesday.

Another industry watcher noted China seemed to wade into the market whenever canola approached its recent support level.

“Every time we have canola futures drop down to $460-ish we seem to develop a new whack of Chinese buying interest in the market,” said Mike Jubinville of ProFarmer Canada in Winnipeg.

Overhead resistance seems to have been firmly set at $480, he added.

“That kind of price level translates into $10.50 a bushel with a decent basis. It is drawing some farmer selling, so the hedging that comes in the market is the last vestige of farmer selling before they lock up.”

The U.S. Department of Agriculture on Wednesday released its quarterly stocks report and pegged U.S. soybean stocks at 191 million bushels, a four-year high.

However, analysts had been expecting bigger supplies than what the USDA stated which allowed soybeans to rise higher. Soyoil felt pressure from slumping crude supplies and ended the final session slightly lower.

Statistics Canada is scheduled to release its updated survey estimates Friday (Oct. 2) on the size of this year’s crop. So far, the general consensus from analysts is that an upward revision is likely.

Whatever the result, neither Jubinville or Ball seemed to think it would move the market in any major way.

Ball said he spoke to half a dozen producers in Saskatchewan who were ecstatic about the yields they were seeing.

“One producer in northeastern Saskatchewan told me that in the first week the only way he was getting anything off that field was through crop insurance.”

That farmer, Ball said, now tells him the crop looks set to yield 45 to 50 bu./ac. as a result of the late summer rains.

Dave Sims writes for Commodity News Service Canada, a Winnipeg company specializing in grain and commodity market reporting. Follow CNS Canada at @CNSCanada on Twitter.

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