ICE Futures canola contracts climbed steadily higher during the first week of October.
Many technical indicators turned bullish less than a month after the market traded at its weakest levels since 2020. The lows appear to be in for now but, after moving $80 off those lows, there may not be much room to the upside. The market will need an outside catalyst to continue higher.
A move above $620 per tonne in the November contract was supportive from a chart standpoint and the next upside target is at the 200-day moving average, around $630 per tonne. Targets on the other side rest at $600 per tonne, and then again around $590.
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Seasonal harvest pressure should be subsiding. Less than 20 per cent of the country’s canola was still unharvested at the beginning of October.
The size of that crop remains to be seen. Average provincial yield estimates were coming in well below the official Statistics Canada reading of 38.4 bushels per acre. Anecdotal reports from the field vary widely. Questions on actual production are likely to persist until well after the December Statistics Canada production report.
With about three million tonnes of carry-in stocks, even if production is only 18 million tonnes instead of 19 million that Statistics Canada forecasts, supplies should be more than sufficient to meet demand.
That demand is strong so far, despite early rumblings of another trade dispute with China. Canada already exported 1.7 million tonnes of canola through the first eight weeks of the 2024-25 marketing year, which is about three times ahead of the year-ago pace.
Other notes
Soybean, corn and wheat futures in the U.S. all moved higher during the week, largely on the back of crude oil. Drought issues facing Russia’s winter wheat crop contributed to the gains in wheat.
The U.S. soybean harvest was about a quarter complete at the start of October, with weather forecasts looking relatively favourable heading into mid-month. Early yield reports indicate a large crop, which will overhang oilseed markets.
Meanwhile, concerns on whether dryness in Brazil would hamper the next soybean seeding have subsided.
Tensions in the Middle East have escalated, with the ongoing conflict widening to Lebanon and drawing in Iran.
