WINNIPEG, Manitoba--The war in Iran and the closure of the Strait of Hormuz will continue to influence crude oil prices, which will then spill over into canola. However, the typical seasonal trends are also showing their influence.
David Derwin, a commodities investment advisor for Ventum Financial in Winnipeg, said the war's effect on canola prices is declining. Derwin added that canola's price volatility has been losing steam over the past few weeks.
The July contract showed a weekly gain of $16.40 per ton, closing at $735 on April 22. The week's low was $709.20/ton, while the high was $743.
"The scenario in Iran has had a little less impact on a day-to-day and week-to-week basis," Derwin said. "Now, canola's going to be driven a lot more by the typical seasonal pattern that is going to carry canola into May and then we'll get weather concerns and production concerns going forward.
Spring upticks in corn and soybean prices, as well as greater clarity over the United States renewable fuel blends, should also support canola going into May. As farmers get out onto their fields to seed, weather concerns will also become a major influence, Derwin added.
The recent opening of Cargill's new canola crush processing plant outside Regina is another "component of demand" for the oilseed, he said. The July canola crush margin was C$345.19/ton above the futures on April 21, nearly three times the amount from one year ago.
"The more we can have processing capacity built up on the Prairies, the better," Derwin added. "Maybe where you'll see it most is probably the basis levels. A crush plant basis level versus (those of) line company elevators, it's usually a lot better. That helps locally and it's a good thing for local producers in and around that area."
While farmers could be inclined to wait and see what will transpire in Iran, Derwin warned not to ignore the fact canola prices have been $100/tonne higher since the start of the year and seasonal highs could come any time until July depending on growing conditions.
"A lot of farmers are proactively marketing and hedging and using options to protect these prices," he said. "We turn to weather, but the numbers would say that the volatility and concern in the market have actually dropped."
Source: Commodity News Service Canada, news@marketsfarm.com
(END) Dow Jones Newswires
04-22-26 1647ET
