WINNIPEG, Manitoba--Canola prices on the Intercontinental Exchange went up during the week ended Feb. 28, but signs of upcoming extended rallies are hard to come by.

The May canola contract closed at C$591.00 per tonne on Feb. 28, up from C$584.10 one week earlier. Prices started the week in decline until a two-day rebound after the weekend. Ken Ball, a Winnipeg-based trader at PI Financial, said canola's behavior was similar to other crops including corn, wheat and soybeans.

"They're all showing a little hint of some short-covering (and uncovering) some support. But not enough to trigger a lot of excitement yet," he said. "We don't yet have a lot (of news) to go on. There's not much sparking anything."

With spring approaching, as well as potential lows in prices, Ball expects more short-covering in the coming weeks and end users to increase their coverage.

"The balance should start to shift, but it's hard to say if there's anything really big brewing right now," he added. "As we move into the month of March, the markets have to get nervous about spring. There's always some weather issues. We never have a smooth spring across all of North America generally."

Soyoil placed large amounts of pressure on canola prices, according to Ball. Over the past 10 sessions, the May contract declined eight times and lost 1.74 U.S. cents per pound over that span.

"The stocks have tightened up, but we anticipated bean oil to be firmer than it has been. It's been on the weak side," he said. "It's not showing a bottom at all. It's still in a bit of a downward channel."

While Canada's canola crush has increased over the past year, exports have been down nearly 33 percent, causing even more pressure on the oilseed. However, there are whispers that much-needed overseas demand may be coming.

"We've heard talk that China may have stepped up some canola buying over the last month or two, but it hasn't yet showed up on the export (numbers). So far, it's only been rumors, but the exports may perk up a bit as we go into spring," Ball said.

He also described March as a "transitional month" as positions are exited prior to the expiry of March contracts. However, trading activity hasn't changed recently, according to Ball. Right now, canola is still looking for a catalyst.

"We've had a little bit of moisture recently (on the Prairies), but we've barely made a dent in the drought in the real dry areas," he said. "I'm not getting a lot of feedback from my clients this year about (canola) acreage decisions. I guess a lot of them are waiting longer than usual to make those decisions...I think we're going to see canola acres come down a bit."


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


(END) Dow Jones Newswires

02-28-24 1653ET