CNS Canada — ICE Futures Canada canola contracts moved lower during the week ended Wednesday, breaking below some chart resistance levels in the process.

The chart pattern is turning flat, however, and further moves will likely depend on outside factors.

Speculators have moved to the short side in the canola market, which accounted for some of the recent weakness in canola. The selling was not that aggressive, with chart patterns starting to turn sideways, according to Keith Ferley of RBC Dominion Securities.

A lack of farmer selling pressure helped underpin values as well, he added.

“It’s brutally cold across the Prairies, so we’re not encouraging any farmers to start their trucks,” he said, noting freezing temperatures were limiting producer selling.

The release of the U.S. Department of Agriculture’s monthly supply/demand report on Thursday will be watched closely by traders on both sides of the border, with any surprises in the data expected to provide some direction for the oilseeds.

After that, Ferley said, South American weather and the resulting crop prospects will be a major factor.

“Most of Brazil is in great shape, and it’s looking like a great crop there,” he said, though he added farmers in Argentina are struggling to finish seeding in some areas due to excess moisture.

“Will the drop in Argentina’s production be enough to hold this market together, or will that be offset by an increase in Brazil?”

— Phil Franz-Warkentin writes for Commodity News Service Canada, a Winnipeg company specializing in grain and commodity market reporting.