ICE weekly outlook: Canola looks for support from new crop

(Dave Bedard photo)

CNS Canada — ICE Futures Canada canola contracts finished lower during the week ended Wednesday but attention in the market is turning to the new crop — and to North American acreage expectations.

During the week, the dominant May canola contract fell $9.20, from $510.80 per tonne to $501.60.

Large funds have now flipped to the short side and are active sellers in the May contract, said Keith Ferley of RBC Dominion Securities.

“Farmers have backed away too, so their selling has decreased and the funds have taken over for them which is keeping the pressure on the market,” he said.

Market attention has shifted to the new crop, which is why November is having “a nice little rally on recent lows.”

While the U.S. Department of Agriculture’s prospective plantings report isn’t due out until next Friday, March 31, Ferley said investors are already beginning to prepare for its release.

“It’s the first actual survey of U.S. acres,” he said, “It also has the March 1 stocks info.”

Many people are now focused on the weather, he added, as soggy field conditions are preventing most Prairie farmers from taking old crop off the field and preparing for seeding.

“Bouts of excess moisture could be coming this spring so farmers will need to get out and seed whenever they can,” said Ferley.

Flood forecasts for North Dakota and Manitoba are also a concern, he added.

Canola enjoyed some technical support at the benchmark $500 mark, but some traders warn that is not a “safe” level and the market could easily carve out floor support around $490.

The last few days of the week were also a choppy affair as traders adjusted old-crop/new-crop positions.

Traders will also be watching Wednesday’s Canadian budget and how it affects the direction of the Canadian currency.

— Dave Sims writes for Commodity News Service Canada, a Winnipeg company specializing in grain and commodity market reporting.

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