Canola Futures Expected to Start Session on Steady to Easier Footing

Strategic Insights -

Market watchers have predicted that canola futures at the Winnipeg Commodity Exchange (WCE) will begin Monday's session with a steady to slightly easier tone, primarily due to anticipated weakness in CBOT soybean complex values. This is attributed to bearish USDA reports released on Friday, revealing record US soybean plantings this year. The reports are expected to put downward pressure on canola futures, with prices potentially moving lower to discourage Canadian farmers from planting the crop this spring. Additionally, the idea that canola area will only be down 5% from last year's level, rather than the initial estimate of 15%, is also expected to contribute to the losses.

Key Takeaways:

  • Canola futures are expected to open steady to maybe down as much as C$1.00 on Monday's session.
  • Bearish USDA reports released on Friday showing record US soybean plantings this year will put downward pressure on canola futures.
  • Ideas that prices will need to move lower to discourage Canadian farmers from planting the crop this spring are expected to contribute to losses.
  • Traders expect 5% decrease in canola area this year, down from the initial estimate of 15%.
  • Brokers note that this would result in a significant amount of canola to deal with, even with an emerging biodiesel market.
  • Losses in canola are expected to be tempered by steady exporter pricing of both old and new business by the Japanese.
  • A Canadian canola sale to Mexico is also being priced, with no information available on whether the business is old or new.
  • Weakness in the Canadian dollar early on Monday is seen as a supportive price influence.

Statistics:

  • Canola futures are expected to open steady to maybe down as much as C$1.00.
  • Bearish USDA reports expect 5% decrease in Canadian canola area this year.
  • Initial estimate was 15% decrease in canola area.
  • Record US soybean plantings this year is expected to put downward pressure on canola futures.
  • Losses in canola are expected to be tempered by steady exporter pricing of both old and new business by the Japanese.
  • Western barley and feed wheat futures are expected to open 50 cents on either side of unchanged.

Sources:

  • Resource News International
  • Winnipeg Commodity Exchange (WCE)
  • COMTEX
  • USDA reports
  • Industry traders and brokers