(Resource News International) –– Canola contracts traded on the ICE Futures Canada platform have started to stabilize in recent sessions, after dropping sharply for most of the month.
According to one analyst, the recent stability could be a sign that the market was close to finding some support. However, he said, the overall bias still remains to the downside in canola.
From a technical perspective, canola should be close to finding some good chart support, said market analyst Darren Frank of FarmLink Marketing Solutions.
The March canola contract hit a fresh contact low of $373.50 per tonne during the week, but found some support at the lows and started to stabilize, despite ongoing weakness in CBOT (Chicago Board of Trade) soybeans.
Frank, based at Oakville, Man., said farmers’ selling was backing away on any downturns, accounting for some of the relative stability in canola.
However, Frank said, a large bounce may not be likely at this time of year, which is typically a slow time in the canola market from a fundamental perspective.
“We can’t get anything for the bulls to grab a hold of,” said Frank, adding that the bearish CBOT soybean market and the weaker tone in Malaysian palm oil could keep canola under pressure for the time being.
Frank said the overall bias in canola would remain to the downside, but the question will be whether any price-sensitive demand is uncovered on any breaks lower.
He recommended producers looking to price their canola not focus on the flat price, but rather look for basis opportunities in the deferred positions where some grain companies will be offering opportunities in order to entice deliveries.