ICE Futures Canada canola contracts have bounced around within a relatively narrow range lately, and could be seeing some further consolidation going forward as the market looked for fresh news to provide direction.
Canola closed right above major support in the most active January contract on Wednesday, and Jerry Klassen, manager of GAP Grains and Products in Winnipeg, expected to see some further consolidation, or perhaps a slight bounce going forward.
With the U.S. soybean harvest in its final stages, harvest pressure from the U.S. market is subsiding “and now we’ll see further consolidation-type trade,” said Klassen.
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Canola could see a strengthening bias, he said, if some seasonal demand comes forward in November and December.
However, “with the economic uncertainty the buyers are more cautious and they are waiting until the last minute to step forward,” said Klassen.
“The trade is anticipating a fairly strong export program, but it’s a matter of ‘When are these guys going to step forward?'” he added.
Financial issues in Europe will limit the large purchases in the near term and temper the commercial buying enthusiasm, said Klassen.
“There is a lot of forecasted demand, but the market is taking a ‘wait and see’ approach before factoring it in.”
From a technical standpoint, Klassen said there was major support in the January contract in the $525 to $530 per tonne level. On the other side, resistance comes in at about $550 per tonne.
“We’re in a 20-dollar range, and given the supply situation (canola) could be here for the next month or two,” he said.
