CNS Canada — ICE Futures Canada canola contracts moved higher during the week ended Wednesday, although prices remain rangebound overall as market participants continue to try and get a better handle on the size of this year’s Canadian crop.
While seasonal harvest pressure may be tempering the upside potential, that selling has not been as large as anticipated due to harvest delays, said Jerry Klassen, manager of Canadian operations with Swiss-based GAP SA Grains and Products in Winnipeg. The slower deliveries also have some industry participants questioning the size of the crop.
Statistics Canada on Tuesday released a model-based production estimate using satellite imagery, pegging the canola crop at 18.3 million tonnes. That’s up from the August estimate of 17 million tonnes, but in line with the previous year’s level.
Many in the trade, however, are still of the opinion that the actual crop is much larger.
Klassen said some estimates were still topping 21 million tonnes, but he placed the crop at about 19 million to 20 million tonnes.
“Traders are trying to get a better handle on the crop size,” he said, adding that “the large variation in the canola crop size estimate has the market holding a bit of a risk premium until the crop is confirmed.”
From a chart standpoint, November canola surged above nearby moving averages during the week, but failed to see follow-through buying interest. Klassen placed nearby resistance at $470 to $475 per tonne.
At the same time, the canola market doesn’t want to go lower either, according to Klassen. He said there was solid commercial demand underneath the market.
— Phil Franz-Warkentin writes for Commodity News Service Canada, a Winnipeg company specializing in grain and commodity market reporting.