ICE weekly outlook: Rangebound canola watches U.S., China

(Dave Bedard photo)

CNS Canada –– ICE Futures Canada canola contracts find themselves trading within a rather narrow range, with a downturn more likely than a move higher in the near term.

“We have a bull and a bear that are yanking each other right now, and (canola) is quite flat,” said analyst Errol Anderson of ProMarket Communications in Calgary.

Canada’s delayed harvest was one supportive influence, with production unlikely to live up to earlier expectations and farmers slow in deliveries as they’ve kept busy with the late harvest.

“Crushers are still doing well, but not as well,” Anderson said, noting processor margins were deteriorating.

Recent Chinese demand for U.S. soybeans has provided spillover support for oilseeds in general, including canola, but Anderson was skeptical how long that demand would last.

“It’s just a matter of time until China cancels a sale,” he said.

While such a move could swing more Chinese demand to Canada, losses in soybeans would still be bearish for canola values, he said.

Overall, Anderson expected Canada’s own production issues would be friendly for basis levels, but as far as the futures were concerned, “where beans go, canola will go.”

General uncertainty in global financial markets, as traders continue to wrap their heads around what a Donald Trump presidency will mean, is another factor to watch, according to Anderson.

— Phil Franz-Warkentin writes for Commodity News Service Canada, a Winnipeg company specializing in grain and commodity market reporting.

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Phil Franz-Warkentin writes for MarketsFarm specializing in grain and commodity market reporting.

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