CNS Canada –– ICE Futures Canada canola contracts posted small losses during the week ended Wednesday, but remained rangebound overall.
That sideways activity is expected to continue over the next month or so, as large supplies and increased farmer selling, on the one side, is countered by solid end-user demand and the weaker Canadian dollar.
“There usually is a wave of farmer selling in January,” said Jerry Klassen, manager of the Canadian office for Swiss-based GAP S.A. Grains and Products, accounting for some of the recent weakness in canola.
However, “there’s also still very good commercial demand underneath the market supporting us at these levels,” he added, noting canola would likely trade within a sideways range for the next month or so.
The weaker Canadian dollar, which settled below US70 cents on Wednesday for the first time since 2003, was contributing to that end-user buying interest.
Longer-term, he expected the canola market would continue to grind lower. The South American soybean harvest will start to come off in March and April, while China will be harvesting in May and June.
From a chart standpoint, Klassen said, the March contract faced major resistance at C$490-$495 per tonne, while support comes in at $475.
— Phil Franz-Warkentin writes for Commodity News Service Canada, a Winnipeg company specializing in grain and commodity market reporting.