CNS Canada –– ICE Futures Canada canola contracts held rangebound during the week ended Wednesday, but could be due for a move higher if the market follows its typical seasonal patterns.
The November canola contract has trended sideways over the past month, with prices ranging from $460 to $480 per tonne. That price range is “the effective trading range for the here and now,” said analyst Mike Jubinville of Pro Farmer Canada.
“September is typically a pretty sluggish trading environment; October, we stabilize; and then into November, we tend to move higher,” he said.
The seasonal uptrend usually corresponded with farmers closing their bins after the initial harvest movement, he said, while commercial exporters generally need to restock after the busy fall.
However, while he said there was room to the upside, Jubinville cautioned resistance was stiff as every attempt at moving above the $480 per tonne level has failed over the past month.
“There’s neither a bull nor bear trend developing,” he said, and that choppy, sideways activity could continue until a production issue comes up somewhere in the world — such as in South America.
On the other side, a dramatic rally in the Canadian dollar, ideal South American growing conditions or heightened concerns over Chinese demand could all provide the catalyst for a move lower.
The possibility for such a move was there, Jubinville said, but the downside risk was relatively low with more signals pointing to a short-term bounce right now.
— Phil Franz-Warkentin writes for Commodity News Service Canada, a Winnipeg company specializing in grain and commodity market reporting.