Glacier FarmMedia | MarketsFarm – The ICE Futures canola market held above major chart support during the week ended Sept. 11, as uncertainty over a Chinese anti-dumping investigation tempered any attempts at moving higher.
The most-active November contract fell sharply lower to start September on news China was retaliating against Canadian tariffs on Chinese electric vehicles by probing Canadian canola imports. The investigation has yet to result in any action on China’s part and canola recovered after its initial bearish reaction to the news. However, questions over disruptions to canola sales to Canada’s largest export customer continue to overhang the market.
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“We’re right back down to an important level of price support,” said David Derwin, commodities investment advisor with Ventum Financial in Winnipeg. The November contract settled at C$569.30 per tonne on Sept. 11, only slightly above the low for the latest move of C$565.00 per tonne. The next support after that comes in at the August low of C$561.40 per tonne, but if the market breaks below that there’s no major support levels on the weekly chart until the C$500 per tonne area.
“It’s a very important level that we’re at right now,” said Derwin.
From a chart standpoint, values are pointing lower “but that doesn’t mean we can’t have a rally,” said Derwin. If there is a corrective bounce, he said it might be worthwhile for farmers to increase their sales and look for hedging opportunities.
“Financial gravity is certainly pulling on canola,” said Derwin, adding that “it’s not just a canola situation,” as soyoil and crude oil were also moving lower.
Beyond the bearish technical signals, the Canadian canola harvest is still in its early stages with varying yield reports across the Prairies. If current levels don’t hold and if the outside markets don’t hold, Derwin expected canola has more room to the downside.
Statistics Canada releases updated production estimates on Sept. 16, which could provide some nearby direction depending on how much weight market participants place on the model-based data.
