Glacier FarmMedia | MarketsFarm — Tight supplies could send old crop canola futures higher before the new crop harvest, but values were showing signs of running into resistance in early May.
July canola was hard pressed to move much above C$700 per tonne to start the month, settling at C$701.30 on May 7.
“The July contract could hit C$725 on a squeeze,” said analyst Errol Anderson of Errol’s Commodity Wire. However, if that were to occur, he expected basis levels would weaken and recommended farmers with any canola left to sell should let it go.
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“Canola is toppy,” and unless weather issues develop during the growing season, he was unsure how much more room to the upside there was in the market.
Anderson said farmers were generally sold out of old crop canola, while domestic crushers will soon be going into seasonal shutdowns.
For the new crop, Anderson placed resistance in the November contract at C$668 per tonne, just above the May 7 close of C$663.00.
Outside factors, such as the escalating conflict between India and Pakistan, could also become a concern depending on how they influence the commodity markets.
Anderson was also watching crude oil values, and what the downtrend there could mean for corn and in turn the other grains and oilseeds — including canola.
“If oil continues to go down, at some point corn will start to break,” said Anderson, adding “at that point canola would also drop.”
