CNS Canada — ICE Futures Canada canola contracts rose during the week ended Wednesday, as strong advances in U.S. soy overpowered resistance cast on the market by the stronger Canadian dollar.
The canola market “was able to get some support from the soy action but the Canadian dollar has taken most of it away… it’s too bad canola couldn’t have tagged along a little more,” said Ken Ball of PI Financial in Winnipeg.
Advances in Malaysian palm oil were bullish for canola while forecasts calling for a tighter carryout of Canadian canola underpinned the market.
Brazil’s political crisis has given strength to the real, which in turn, has made soybean exports less desirable to international buyers. As a result, countries have been shopping around for cheaper supplies of oilseeds.
Portions of Saskatchewan and Alberta remain excessively dry, which, while not a panic at this stage, is definitely a feature of the market activity.
The most-active July contract rose above its 200-day moving average as a result of the buying interest.
Traders were also positioning themselves ahead of Thursday’s planting intentions report, compiled by Statistics Canada.
Most analysts expected to see a slight rise in canola acres while a few pundits figured acreage would be lower. Guesses ranged from 19.7 million to 21 million acres.
“Intentions can be variable and sometimes out of whack, so we’ll see, it will give us a rough guideline,” said Ball, who estimated acreage could be a “pinch” higher than last year’s 20.095 million acres.
Going forward, Ball said, canola could get some support, though, if the acreage numbers are down by a million acres or more.
“Canola supplies will be leaning on the tight side at the end of this year, so the market won’t want to see acres going down at all,” he added.
— Dave Sims writes for Commodity News Service Canada, a Winnipeg company specializing in grain and commodity market reporting.