ICE Futures Canada canola futures moved higher during the week ended August 14, recovering from the fresh lows that were put in place the week prior.
Some of the strength was linked to the futures following the rally seen in Chicago soybeans, which was sparked by a bullish U.S. Department of Agriculture report that showed smaller-than-anticipated U.S. soybean production for 2013-14.
Monday’s USDA crop report estimated 2013-14 U.S. soybean production at 3.255 billion bushels, which was below expectations of 3.336 billion bushels.
Canola values saw some independent movement linked to concerns about cooler weather slowing development in Western Canada, but forecasts have since turned warmer.
Going forward, the technical bias does remain pointed to the downside, as there aren’t too many problems or concerns surrounding the state of the Canadian canola crop, analysts said.
Traders have shown they don’t have a lot of interest in pushing canola too much higher as the market has lagged the gains in soybeans to the upside recently, said Ken Ball of PI Financial in Winnipeg.
But despite the bearish technical bias, choppy activity is expected because the canola market will likely follow along with whatever happens in the Chicago soybean complex.
“Canola is quite relaxed, and relaxed markets don’t tend to want to go up that easily,” said Ball. “But the bean market is a little bit nervous, and nervous markets do tend to want to go up a little bit.”
Ball noted the biggest resistance call, chart-wise, for canola futures is at the $520 per tonne level. But the $500 per tonne level is also a barrier because farmers have been noted sellers when the market approaches that level, he added.
— Terryn Shiells writes for Commodity News Service Canada, a Winnipeg company specializing in grain and commodity market reporting.