WINNIPEG(CNS) – The ICE Futures Canada canola market could be going on a choppy ride this summer as weather challenges and the topsy-turvy world of international trade battles threaten to fill the next few months with volatility.
“Particularly in the summer months, Trump issues and weather issues will be the primary drivers, both are hard to predict,” said Mike Jubinville of ProFarmer Canada in Winnipeg.
Canola’s front-month July contract opened on June 6 at C$524.10 a tonne, which is at the lower end of the range it’s held since mid-March. Technical support has recently kept the contract from going any lower than that in recent weeks.
However, Jubinville points out that somewhere between the end of May and the third week of June, the market can start to feel pressure if the crop gets off to a good start.
“Farmers holding old crop supplies may decide to liquidate old crop and the market goes lower,” he explained. “Speculators will then liquidate positions and so we go lower heading into the summer.”
On the bullish side of the equation, demand from China will likely be a driver so long as it and the U.S. remain locked in a tit-for-tat trade battle.
Recent rains have also weighed on contracts but another analyst points out the crop will need moisture in the weeks ahead.
“There are still dry pockets in southwestern Saskatchewan and southeastern Alberta,” said Keith Ferley of RBC Dominion Securities, in Winnipeg.
Farmer selling has tailed off in the last few days, which could provide a bit of support for canola in the near future.
“Farmers seem a bit shell-shocked (from the low prices) as they back away from the market for a moment,” he said.