MarketsFarm — The shine has officially come off the ICE Futures canola market, with prices dropping well below their multi-year highs during the last week of October.
The most active January contract hit an overnight low of $514 per tonne on Wednesday, but managed to settle at $535.60. That compares with the contract high of $552.90 set only two days earlier.
“With canola dropping $30 overnight, it definitely suggests that the top is in for 2020,” analyst Errol Anderson of Pro Market Communications said.
The latest activity was damaging from a chart standpoint, he said, with the January contract facing major support at $500 per tonne.
On the other side, resistance comes at around $540 per tonne.
Anderson expected a recovery could take canola back toward that resistance level before the market falters again with nearby support at $520.
The U.S. election on Tuesday is keeping some uncertainty in oilseed markets, with any changes to U.S./China trade relations after the election likely to provide some direction to the futures.
Anderson expected China’s buying interest for U.S. soybeans would fade in November, which would also weigh on the canola market.
Cash bids have also come off their highs, but remain relatively favourable, according to Anderson.
He expected prices would now remain under pressure until the spring, with possible basis opportunities closer to seeding.
— Phil Franz-Warkentin reports for MarketsFarm from Winnipeg.