ICE Futures Canada canola contracts hit their strongest levels in over a month during the week ended October 30, but settled well off those highs to post losses overall as the market ran into resistance to the upside.
“We’re rangebound and need some new news,” said market analyst Wayne Palmer of Agri-Trend Marketing. He said that catalyst could come when the USDA releases its next supply/demand report on November 8. If there is a surprise in the numbers and soybeans jump higher or fall lower, canola would likely react as well. “It will be interesting to see what the commercials do going into that report,” he added.
In the meantime, crush margins remain very good for canola, with gains in CBOT soyoil and recent weakness in the Canadian dollar keeping domestic processors on the buy side, said Palmer.
While crushers remain interested in buying canola, farmer selling has backed away. Palmer said many farmers would likely be looking to sell at C$11 per bushel, which, given current basis levels, would require the January futures to move to C$510 per tonne.
“It’s a magic number,” said Palmer adding that if any end users are ever caught short “they know where they can cover a lot of business in the cash market.”