WINNIPEG, Manitoba-- ICE Futures canola contracts have climbed steadily higher since their lows in late May, nearing chart resistance to the upside on the first day of summer.
Updated renewable fuel targets released by the United States Environmental Protection Agency failed to live up to expectations, sparking a speculative selloff in soyoil. The limit-down move in soyoil futures on June 21 would normally weigh on canola, the Canadian oilseed lagged soyoil to the upside. While it was rising earlier in the month, spreading between the two commodities was seeing speculators selling soyoil and buying back short positions in canola, according to Ken Ball of PI Financial in Winnipeg.
He added that "canola is still looking relatively cheap as an oilseed."
Declining crop ratings for soybeans in the U.S. were underpinning futures there, but Ball said the canola crop was in better shape overall.
"There are still some areas of concern, but canola condition ratings have improved in the past week," said Ball, noting that many dry areas of Alberta and Saskatchewan had received rain.
Statistics Canada will release updated acreage estimates on June 28, and Ball expects farmers likely kept with their initial intentions for the most part, seeding about 21.6 million acres of canola. However, the April report was based off data obtained in late December and early January, rather than closer to spring as was typically done in the past, which could lead to larger adjustments than usual.