CNS Canada — The ICE Futures Canada canola complex is facing a slew of supportive and bearish factors as it slowly makes its way through the first part of January.

Foremost on traders’ minds is a batch of reports set to be released by the U.S. Department of Agriculture on Friday.

Already, there are ideas the agency’s supply and demand report could include upward revisions to yield and production numbers in the U.S. as well as a slight uptick to the carryout.

There is also speculation export projections will be lowered for the U.S. while Brazil’s production number will be hiked.

Factors add up to a bearish headwind for oilseeds, at a time when most of them are under pressure.

“The funds are building a short position in here so they are willing sellers and the longer-term trend is on the downward flow,” said Keith Ferley of RBC Dominion Securities.

The strength of the Canadian dollar has also weighed down canola futures, he added. “It has limited our exports as well as new business opportunities and hurt our crush margins.”

Ferley pegs support for canola’s dominant March contract at the $485 per tonne level and resistance at $500.

“The limiting factor right now is that farmers are steady sellers,” he said, “not necessarily aggressive sellers, but basis levels have been snapping up.”

That could change as cold weather is expected to descend on parts of the Prairies over the next week. Typically, that slows canola sales to local elevators and provides markets with an upward tick.

Still, Ferley said, there is reasonable demand for canola right now, so it’s not like business will totally dry up.

“What that demand is going to be like in two, three or four months is more of question mark,” he said.

— Dave Sims writes for Commodity News Service Canada, a Glacier FarmMedia company specializing in grain and commodity market reporting.