Winnipeg – ICE Futures canola contracts held within a narrow trading range during the week ended Feb. 6, as participants await some fresh market moving news. While the sideways trading range could persist in the near term, an analyst said new crop futures were at decent levels and encouraged farmers to do some forward pricing.
The November canola contract settled at C$498.10 per tonne on Feb. 6, while January traded at C$502.30.
While average basis levels for new crop canola of C$35 to C$40 per tonne below the futures are not that great, “we don’t want to see this C$500 level disappear on us,” said commodity investments advisor David Derwin, of PI Financial. He recommended that growers price some of the 2019/20 crop now, and worry about the basis later.
Old crop basis levels are a bit more favourable, but they’re still wider than farmers would like to see. Derwin said C$11 per bushel (C$485 per tonne) was a cash target many growers were likely looking at. However, current basis levels in the C$15 to C$20 per tonne range below the futures work out to cash bids of C$10.50 to C$10.65 per bushel.
The United States Department of Agriculture releases a number of supply/demand reports on Friday, Feb. 9. Any surprises in those reports, and resulting moves in soybeans, could provide some nearby direction for the canola market.