CNS Canada –– ICE Futures Canada canola contracts sunk lower during the week ended Wednesday, pressured by fund selling and a drop in the U.S. soy complex.
However, there could be some relief in sight, as the market looks to correct itself.
“Funds coming into this week were huge, longs in soybeans and corn; they’re getting out of it, they’ve had enough,” said Wayne Palmer, an analyst based in Winnipeg.
Canola’s front-month November contract fell $8.60 a tonne over the period, which was interrupted by market closures in Canada and the U.S. for Canada Day and the Fourth of July respectively.
Weather conditions have generally been favourable for the development of oilseeds across Canada and the U.S., which also weighed down the market.
“So far, the weatherman has been wrong. There hasn’t been any hot and dry weather; there’s adequate moisture right across North America,” Palmer said.
The crop was already well established and could be firmly positioned for success if weather conditions stayed favourable into the latter part of July, he added.
“Until the weather forecast changes we’re in for a downtrend here. The crop here is probably 50 per cent made. You get another three weeks of this weather and it will be 80 per cent made to the point of no return,” he said.
However, Palmer said, canola could be poised for a rebound in the next few days on sentiments the losses were overdone.
The market is also still taking some support from a recent forecast from the International Grains Council. The IGC predicted world canola/rapeseed stocks would hit their lowest levels in 13 years sometime in the next year or so.
— Dave Sims writes for Commodity News Service Canada, a Winnipeg company specializing in grain and commodity market reporting.