ICE weekly outlook: Canola market at mercy of weather

CNS Canada — ICE Futures Canada canola contracts climbed higher during the week ended Wednesday, following gains in the U.S. soy market.

The dominant November canola contract posted a gain of $28.70 per tonne. That lifted it above major resistance to settle at $510.80.

Prices were also boosted by concerns that rising temperatures in Western Canada could stress flowering canola plants.

“We are going to be in the throes of whatever the next six- to 10-day outlook is,” said Mike Jubinville of ProFarmer Canada in Winnipeg.

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The canola crop is in a varied state of development right now, he added, as some fields were seeded late.

“Once it is in flower it is subject to heat blast, unless it gets reasonable rains,” he said.

Those concerns are echoed by other market watchers who feel the crop is in a vulnerable stage.

“There are concerns about canola yields going backwards, depending on how the weather plays out,” said Jonathon Driedger of Farmlink Marketing Solutions, also in Winnipeg.

Driedger pegged resistance at the $515 mark but said that’s less certain in a weather market than most other times.

Canola’s rally over the past week is impressive, Jubinville said, but cautions the market could move down just as easily.

“We are into a weather market,” he said. “So we have heightened volatility.”

The canola market, he said, is in a $470-$530 trading range. “I think canola’s bottom end is sub-$10 a bushel at the elevator.”

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

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