CNS Canada — The ICE Futures Canada canola market moved higher during the week ended Wednesday, taking some direction from advances seen in Chicago soybean futures.
But the market seems to be moving into its upper range and could be vulnerable to a downward correction going forward, according to Ken Ball of PI Financial in Winnipeg.
“The May is probably pushing its upper ranges, assuming that the beans have hit a peak here, which they probably have for now anyway. There’s not much there to keep prices strong,” he added.
The May contract is now the most active of the futures, though the March contract could still see some upward price movement ahead of its expiry, if it takes a similar path to the November 2014 and January 2015 futures.
“We have had aggressive action on speculative traders playing the spreads going into expiry both in November and in January. So, the March contract could do anything,” said Ball. “January and November went $15-plus at some times over the next month, so March could kick higher.”
Going forward, the market will continue to find direction from the Chicago soy complex, as well as any movement seen in the Canadian dollar.
“The Canadian dollar seems to have bottomed, but it’s not necessarily going to leap higher right away, it may chop around down here for a while. But it’s no longer going to be as supportive a factor as it has been for canola,” Ball said.
If Chicago soybeans move lower, and the Canadian dollar moves higher, the canola market will likely see some increased selling from growers in the coming weeks, he added.
The attention will also start turning to conditions heading into spring seeding, which is still fairly far away for Canadians — but in the U.S., corn planting is only about four weeks away, Ball said.
A good part of Saskatchewan and Manitoba is still seeing good subsoil moisture, and a drier spring would be welcome news for many growers, he added.
— Terryn Shiells writes for Commodity News Service Canada, a Winnipeg company specializing in grain and commodity market reporting.