CNS Canada –– ICE Futures Canada canola contracts chopped around in sideways trading during the week ended Wednesday, before settling slightly lower.
Activity was volatile with values generally staying within a $10 range, analysts said. Gains in the U.S. soy complex were responsible for much of the support canola saw over the five-day period, along with traders closing shorts. A lack of farmer selling also underpinned futures.
The May/July contract spread was a feature of the week as traders exited positions ahead of the May contract expiry.
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There were good gains for the Chicago soy complex during the week ended Feb. 4, due to positive news that Wednesday.
While recent firmness in the Canadian dollar buffeted canola’s upside, one trader said he thought the market had held up admirably.
“Canola has been quite sturdy. Canola has gotten expensive, crush margins have collapsed sharply and canola is quite high-priced right now,” said Ken Ball of PI Financial in Winnipeg.
Some buyers were likely discouraged by canola’s high price, he added, but the market could still hold near its present level.
“There’s been good support around the $448 (per tonne) level,” he said, noting canola did test levels below that before coming back up.
Moving ahead, Ball estimated canola could see resistance at the $455 and $460 level.
Weather is a factor everyone is taking stock of right now, he said, as farmers seed their crops.
“Conditions are more variable out west,” he noted, pointing out some regions had experienced snow, while others were too dry.
Some farmers have already begun putting canola into the ground, while others are still waiting to get started.
“It warmed up a bit out west, more than here,” said Ball.
Looking ahead, he said, it will be interesting to see if the Canadian dollar manages to drag canola down to some degree.
— Dave Sims writes for Commodity News Service Canada, a Winnipeg company specializing in grain and commodity market reporting.
