CNS Canada — ICE Futures Canada canola contracts fell to their lowest levels in a month earlier this week, but appear to have found some support from a chart standpoint. Solid demand on the one hand is being countered by large supplies on the other.
“The demand component is powerfully strong,” said Mike Jubinville of ProFarmer Canada in Winnipeg. He noted both exports and domestic crush were running in line with last year’s record pace.
However, supplies are equally large, with Statistics Canada widely expected to raise the canola production number in its final survey results of the year on Dec. 6. The government agency last pegged the crop at 19.7 million tonnes, but average trade guesses are topping 20 million tonnes, with some as high as 21.5 million.
“We’re neither bullish nor bearish here,” said Jubinville. Rather, he sees canola as ebbing and flowing within a broad sideways trading range.
Seasonal trading patterns would typically see values soften ahead of Christmas, then turn higher in the spring, unless a problem with South America’s soybean crop materializes earlier, according to Jubinville.
From a chart perspective, he placed nearby resistance in the January contract at $520 per tonne, with support hovering around $500-$505 per tonne.
In addition to StatsCan’s numbers, the canola market will also be following news from the U.S. Environmental Protection Agency (EPA) closely. The EPA is set to announce its renewable fuels targets for the next year on Thursday.
— Phil Franz-Warkentin writes for Commodity News Service Canada, a Glacier FarmMedia company specializing in grain and commodity market reporting.