Glacier FarmMedia | MarketsFarm — ICE Futures canola market traded within a wide range during the week ended Jan. 15, hitting its strongest levels since November at one point before backing away from those highs.
Analyst Lawrence Klusa of Seges Markets said dryness concerns in South America and ongoing support following the Jan. 10 supply/demand report from the United States Department of Agriculture accounted for some of the buying interest that spilled into canola. Broad strength in world vegetable oil markets was another supportive influence, as “the demand for vegetable oil has been strong.”
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Klusa noted that U.S. soyoil exports are running well ahead of last year’s pace, and Canadian canola exports are also solid.
While the possibility of trade disputes with both the U.S. and China overhangs the canola market, Klusa noted that China was still buying canola in large quantities.
“The canola carryout will be smaller this year than last year, which is reasonably bullish as well,” said Klusa. However, demand will need to be rationed, as “we cannot keep up the export pace we’re on right now.”
From a chart standpoint, the March contract ran into resistance just below C$650 per tonne, with nearby support seen around C$620 per tonne. Klusa expected values could break higher, barring an outside bearish influence. “If there’s enough fundamental demand, there’s always room to the upside.”
