CNS Canada — ICE Futures Canada canola contracts moved higher during the week ended Wednesday, despite a softer tone in the Chicago soy market, as tight old-crop supplies and chart-based buying supported the Canadian oilseed.
Statistics Canada releases its updated acreage estimates on Thursday, and any surprises in the data could provide some nearby direction for canola.
Trade estimates for canola acres range from about 21 million to 22.7 million, which would compare with the 20.4 million seeded in 2016. However, yields are already being questioned in some areas due to poor growing conditions.
“We need a big canola crop this year just to maintain supplies,” said Ken Ball of PI Financial in Winnipeg.
November canola, he said, was looking relatively cheap given the tight old-crop supply situation, which could support the futures going forward.
“It’s hard to say early in the year, but we’re not exactly on the path for a big crop yet,” said Ball, adding, “we could have an extremely tight canola crop this year if we don’t have more uniform conditions in July.”
Ball estimated the industry would like to see a 19.5 million-tonne crop in 2017 in order to meet demand. That would be about one million tonnes above the previous year’s crop and “tough to get.”
However, crop conditions for soybeans across the U.S. Midwest are relatively favourable, and resulting losses in the Chicago futures could weigh on canola prices.
Recent strength in the Canadian dollar is another bearish influence, as the currency has climbed sharply over the past month to trade at US76.7 cents.
— Phil Franz-Warkentin writes for Commodity News Service Canada, a Winnipeg company specializing in grain and commodity market reporting.