Canada Markets

With key acreage reports being released in both Canada and the United States the week of June 24, new-crop canola prices have largely traded range-bound within a $16 per metric tonne trading range over most of the past three trading weeks, between $561.60/mt and $545.70/mt.

After breaking $9/mt below the lower-end of the trading range on June 17 to reach an intra-day low of $536.70/mt, canola rallied to close back within its trading range at $548.50/mt that same day. Within two days, prices had rallied to retrace almost 61.8% of the $40.50/mt downtrend from the June 3 high to the June 17 low. Since then, prices have pushed down near the lower limit of the trading range, with June 24 trade reaching a low of $547.10 before rebounding to the most recent level of $549.30/mt, as seen Monday morning.

Canola's performance is in stark-contrast to the November soybean contract during the week of June 17. While November canola futures advanced $7.40/mt over the course of the week, soybeans for November closed 24 3/4 cents lower. A 268-point decline in the Canadian dollar over the week played a significant role in terms of supporting canola prices over the week.

Commodity News Service reports the average trade estimate for new-crop canola acres will range between 19.1 and 20 million acres. This compares to the March estimates reported by Statistics Canada at 19.133 mmt and 2012's acreage at 21.531 mmt. A move to the 20 million acre level with a corresponding return to normalized yields could push total production near Canola Council of Canada's goal of producing 15 mmt by 2015, while relieving concerns about supplies in the upcoming year.

Should the Tuesday report satisfy markets with a call for higher acres, a breach of support at $546.70/mt could lead to a further move lower to the 50% retracement at $535.60/mt.

Statistics Canada will release the acreage report at 8:30 a.m. ET.

Cliff Jamieson can be reached at cliff.jamieson@telventdtn.com

(AG)

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