CNS Canada –– ICE Futures Canada canola contracts have moved steadily higher over the past month, but the market remains rangebound overall.
“There are underlying supportive influences for canola, but it still comes down to the bigger trends in vegetable oils and oilseeds competing internationally,” said Mike Jubinville of ProFarmer Canada, adding that “there’s a lot (of oilseeds) around, and that’s not going away.”
Soybeans, soyoil and palm oil all appear to be “rounding the top,” which should weigh on canola as those outside markets drift lower.
However, any weather concerns that materialize through the spring and summer do have the potential to provide short-term support.
“Weather scares will inevitably give us a bounce up,” said Jubinville, “but we lack the true bullish catalyst to sustain the upside.”
As a result, he said the relatively sideways “ebb and flow” trade in canola could go on for months, if not years “until something changes.”
While the futures may see wider price swings within that range, Jubinville said basis levels will likely work to keep cash prices in the $9.50 to $11 per bushel area.
Farmers, he said, were unwilling sellers when prices move below $10; prices approaching the $11 mark have been “enough to buy as much canola as the market needs.”
— Phil Franz-Warkentin writes for Commodity News Service Canada, a Winnipeg company specializing in grain and commodity market reporting.