WINNIPEG, Manitoba--In a show of independent strength, canola futures on the Intercontinental Exchange had one of their best weeks this calendar year during the week ended Wednesday.

Despite taking a step back at the end of the week due to vegetable oil weakness, the July canola contract jumped C$15.60 per metric ton for the week to C$639.40 a ton on Wednesday. The contract reached C$652.90 a ton earlier in the day, its highest level since March 26.

Ken Ball of PI Financial Services in Winnipeg said canola's rise was surprising considering crush margins dropped more than C$20 a ton over the past week. He said while growers' concerns over dryness in the Prairies may have had an effect, the funds and canola crushers may have played a bigger part.

"Probably a combination of speculative money and a little bit of short-covering in canola. I think it might have been spreaders who were short canola," Ball said. "It could also be crushers. Crush indexes in the futures contracts are at their lowest levels in more than a year, but they're still relatively high historically."

There is still opportunity for canola to go higher, Ball said. It will happen if either soyoil prices rise or adverse weather appears during the summer.

"Assuming we do get some 'weather scares' in June or July, which we usually do, hopefully we'll get some rain and things will be pretty good. But we'll get some scares, especially when it starts to warm up," he said.

If the July contract exceeds C$650 a ton, it could be a sign that the C$700 mark would be in sight, according to Ball, especially if hot and dry weather continues on the Prairies. However, if the Prairies see healthy amounts of rain in the coming weeks, which appears less likely for now, the July contract could fall to C$620 a ton.

In order for canola to regain positive price momentum, it would need some help from vegetable oils.

"All the vegetable oils need to be much firmer than they have been of late. Palm oil had been stronger earlier in the year, but it retraced half of those gains by now," Ball said. "Canola's just going to need some better help to go higher at this stage. Later on, it might be able to muster up some strength to go on its own if the weather proves to be a bit threatening."


Source: Commodity News Service Canada, news@marketsfarm.com

(END) Dow Jones Newswires

04-24-24 1911ET