CNS Canada — ICE Futures Canada canola contracts managed to post small gains over the week ended Wedensday, as the market recovered off of the contract lows hit the previous week.
However, former support levels are now acting as resistance, as the market finds itself in a new, slightly lower range.
Support in the front month canola contract had held at the $460 per tonne mark for 10 months, but that level has now switched to resistance.
On a weekly chart, the $440-$450 per tonne level now represents solid chart support, with resistance at $460-$470, said Mike Jubinville of ProFarmer Canada.
A rise in the Canadian dollar relative to its U.S. counterpart was putting some pressure on canola.
Uncertainty over demand from China, as that country is set to implement tighter dockage allowances, also remain a bearish influence.
“Ultimately, they need us and we need them and they’ll buy all the canola we expect, but we just have to get through this period of uncertainty,” said Jubinville.
“We took a stab to the downside on a knee-jerk reaction to China, but I have a feeling that’s not going to be a lasting issue; it will get resolved over time.”
Canola was price-competitive with other oilseeds, he added, with any losses in Chinese business likely picked up by other customers.
The domestic crush pace also remains strong, while seasonal strength also should come forward at this time of year as weather issues take greater prominence.
Jubinville noted the western side of the Canadian Prairies already looks dry — conditions which will be followed closely by market participants.
Farmer selling has backed away as prices have moved below $10 per bushel in the countryside and farmers lock their bins, which may be another supportive price influence going forward.
— Phil Franz-Warkentin writes for Commodity News Service Canada, a Winnipeg company specializing in grain and commodity market reporting. Follow CNS Canada at @CNSCanada on Twitter.