Seasonal highs appear to be in for the ICE Futures canola market, as prices fell sharply lower to start June. Support eventually came forward and values may now trade in a sideways range.
The November contract hit a session high of $696.70 per tonne on May 29, but was more that $50 down a few days later, at $640 per tonne, before settling at $660.70 June 6.
Prices could trade within a broad $100 range over the next few months, between $600 and $700, if the $640 level is breached. Farmers are thought to be holding large old crop supplies, while early signs point to good new crop production prospects, which will limit upside without a fresh catalyst.
Consistent rains have hampered some seeding operations, but not enough to generate a weather premium, and the moisture will improve yields. Agriculture and Agri-Food Canada currently estimates canola production in 2024-25 at 18.1 million tonnes, but some analysts are already seeing a potential 20 million-tonne crop.
Export movement remains lacklustre at best, but canola is said to look more attractively priced internationally.
In the United States, sharp losses in the wheat market spilled over to pull soybeans and corn lower as well. Wheat climbed higher in May as frosts in Russia hurt production there. While the killing frosts were followed by excessive heat and dryness, and analysts continued to lower their calls on Russian wheat production, a ‘buy the rumour, sell the fact’ sentiment saw wheat markets fall sharply off their highs.
Soybean and corn futures lack any bullish news of their own, with U.S. crops thought to be off to a solid start.
From a chart standpoint, the September Chicago wheat contract lost roughly $1 per bushel over two weeks, trading right around its 50-day moving average of US$6.40 per bushel on June 7. Minneapolis spring wheat neared the psychological $7 per bushel level in the September contract, finding itself in a broad range between $6.60 and $7.60 per bushel.
November soybeans uncovered support around US$11.50 per bushel, with May highs around $12.20 representing major resistance. Nearby support in the September corn contract comes in at $4.45 per bushel, with an upside target around $4.80.
Source: Manitoba Cooperator