Glacier FarmMedia — Canadian canola futures are poised to slip back in the short term, although the oilseed could climb slowly higher in the long term, said Jamie Wilton, trader with R.J. O’Brien in Winnipeg, Man.
After a rally over several sessions, the January canola contract fell back on Nov. 19, closing at C$650.40 per tonne. However, that was pretty much at the resistance level it previously broke through, and Wilton doesn’t see canola remaining there.
“I can see it moving back into the $630s. A little bit of a step back as you go into Christmas,” he said. “I don’t think it breaks out to the upside in the short term.”
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“A major move up could be slow, from crusher demand over the long term,” Wilton added.
However, should Canada and China resolve their trade differences and China begins buying Canadian canola, then he said the oilseed “will move up quickly.”
Presently, China has a tariff of nearly 76 per cent on imports of Canadian canola seed and 100 per cent duties on the oil and meal. The former has been China’s response to its anti-dumping investigation on Canada, and the latter was to counter the 100 per cent surcharges Canada slapped on imports of Chinese electric vehicles.
Based on data from the Canadian Grain Commission, China has yet to purchase Canadian canola in 2025/26.
The Canadian government commented recently that some progress has been made in talks with China, including hints that tariffs on those electric vehicles are in play. However, the trade believes any deal likely won’t be reached until sometime after the New Year.
Until then, Wilton sees canola eventually consolidating around its 200-day moving average, which as of Nov. 19 stood at C$661.50/tonne for the January contract.
