CNS Canada — ICE Futures Canada canola contracts were up and down during the week ended Wednesday, although the nearby bias could still be pointed higher, according to a market analyst.

Statistics Canada is forecasting record canola seedings in 2017 of 22.4 million acres, but Wayne Palmer of Agri-Trend Marketing in Winnipeg said actual seeded area is unlikely to live up to that projection due to poor seeding weather.

Old-crop canola supplies are also looking very tight going forward. Farmers sold into rallies earlier in the year and are now on the sidelines until they get a better handle on new crop production, said Palmer.

As a result, he said, the nearby July contract could see its premium over the new-crop contracts widen considerably before expiry.

“There’s not enough canola out there to take care of everybody, so it will be a very interesting June.”

While the fundamentals are a bit more bearish for U.S. soybeans, Palmer noted the Chicago futures were still holding relatively strong on the back of solid export demand.

Looking farther ahead, seeding delays in Western Canada raise the risk of frost damage in the fall. “We haven’t had a legitimate frost scare in quite a while,” said Palmer.

The one million to 1.5 million tonnes of canola left to overwinter in Western Canada also remain a factor in the background, although the quality of those supplies is proving to be very poor as the harvest progresses.

Poor quality and huge discounts were limiting the impact of that overwintered canola in the larger supply/demand picture, Palmer said.

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