Seasonal harvest pressure and ongoing demand uncertainty may keep a lid on the canola market over the next few weeks, but futures still showed some modest strength during the week ended Sept. 12 as oversold chart signals and spillover from Chicago soyoil provided support.
November canola hit a five-and-a-half month low of C$610.20 per tonne on Sept. 4 but was trading about C$30 per tonne above that level, and back in line with its 20-day moving average, by Sept. 12.
Looking at a chart, there’s a case to be made that the contract was forming a head and shoulders pattern which would imply a bottom was in for the time being.
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However, if support at the nearby low is broken, the next major downside target comes in at C$600 per tonne. On the other side, nearby resistance is seen at C$660 per tonne.
Any significant developments on the trade front with China could be the catalyst to break the market out of its broad sideways range. In the absence of that, the futures will continue to take direction from activity in soybeans and soyoil.
The United States is dealing with its own tariff-related issues with China. Just as China is usually a major buyer of Canadian canola, it’s also a prime destination for U.S. soybeans. However, that business has dried up.
Weekly export sales data show the U.S. has yet to sell any soybeans to China for delivery during the 2025-26 marketing year. That compares to this time a year ago when 4.9 million tonnes were already on the books to move to China.
The U.S. loss of the Chinese market is coming just as U.S. farmers are about to harvest one of their largest soybean crops on record.
Updated supply/demand data from the U.S. Department of Agriculture released Sept. 12 pegged production at 117.05 million tonnes, which was up from the August estimate of 116.82 million tonnes but still down slightly from the 118.84 million tonnes grown in 2024-25. Seeded area was down, but yields are forecast at a record 53.5 bushels per acre.
The initial reaction in the futures to the updated data was bearish, although relatively tight ending stocks projections kept values from falling too far. USDA foresees the soybean carryout tightening to 8.17 million tonnes in 2025/26, from nearly nine million for 2024-25. Total exports for the current marketing year are forecast at 45.86 million tonnes, which would be down by less than half a million tonnes on the year.
That projection would depend on China coming back to the market, which remains highly questionable for now.
