ICE weekly outlook: Canola entering holiday mode

ICE January 2021 canola with Bollinger (20,2) bands and 20-, 50- and 100-day moving averages. (Barchart)

MarketsFarm — ICE Futures canola contracts hit fresh multi-year highs following the release of updated production data from Statistics Canada, but the market ran into resistance and could be expected to see some consolidation ahead of the New Year.

The most-active January contract touched a session high of $599 per tonne on Friday last week, after StatsCan pegged the country’s canola crop at 18.7 million tonnes. That came in at the low end of trade expectations, and would be the smallest crop in five years. Meanwhile, exports are running at a record pace.

“The underlying fundamental factors are still there,” analyst Mike Jubinville of MarketsFarm Pro said, adding “demand is moving along at too aggressive a pace relative to available supply.”

While he expected the long-term trend would remain pointed higher, he added “a bullish market needs to be fed on a consistent basis” and he expected to see some consolidation through Christmas into the New Year.

At that time, the market will regroup with attention on South American weather and Chinese export demand.

From a chart perspective, the 20-day moving average (currently at around $577 per tonne) has provided some support for canola, with the January contract testing that point on Wednesday before correcting higher.

On the other side, psychological support can be found at $600 per tonne, with technical signals placing the next upside target at around $620 per tonne, Jubinville said.

— Phil Franz-Warkentin reports for MarketsFarm from Winnipeg.



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