ICE weekly outlook: Canola runs into headwind

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Published: February 15, 2017

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CNS Canada — ICE Futures Canada canola contracts are running into major upside resistance from a chart standpoint, with a turn lower more likely than additional gains in the near term.

“The demand component for canola remains quite strong, although domestic crush margins have diminished,” said Mike Jubinville of ProFarmer Canada.

Soyoil futures at the Chicago Board of Trade have already “broken (their) uptrend,” he said.

Large South American crops, together with expectations for increased U.S. soybean and Canadian canola acres, “are the headwinds that limit the ability of the canola market to sustain a trend higher,” he said.

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Pointing to a weekly chart, he noted canola faces major resistance in the $530-$540 per tonne range, a level not breached by the front-month contract in any significant fashion since 2013.

“I don’t see anything fundamentally that says ‘We need to do an upside breakout of that,'” said Jubinville.

While he said the upside may be limited, Jubinville was also not bearish on canola.

“We’re in a big supply-versus-big demand environment,” he said, placing the futures in a “broad, sideways range.”

On the supportive side, he said the record domestic crush pace, tightening supplies and solid export demand were all underpinning canola.

— Phil Franz-Warkentin writes for Commodity News Service Canada, a Winnipeg company specializing in grain and commodity market reporting.

About The Author

Phil Franz-Warkentin

Phil Franz-Warkentin

Editor - Daily News

Phil Franz-Warkentin grew up on an acreage in southern Manitoba and has reported on agriculture for over 20 years. Based in Winnipeg, his writing has appeared in publications across Canada and internationally. Phil is a trusted voice on the Prairie radio waves providing daily futures market updates. In his spare time, Phil enjoys playing music and making art.

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