MarketsFarm — ICE Futures canola contracts backed away from nearby highs during the week ended Wednesday, signalling that the top may be in for the time being as the harvest gets started.

“There’s clearly been a shift in canola,” Ken Ball of PI Financial in Winnipeg said of the move away from the early August highs.

Solid commercial demand and speculative fund buying supported prices for most of July, but the fund traders have flipped to the other side to book profits, he said, noting there was no major fundamental reason behind the decline.

Looming seasonal harvest pressure may also limit the upside in the near term, with the November contract facing resistance around $490-$494 per tonne.

Ball noted canola was more profitable than wheat at current prices, which should be leading to more farmer selling for cash flow.

The downside will depend on the size of the 2020-21 crop and whether stocks are deemed tight or not.

Production estimates for the canola crop are wide, ranging at anywhere from 18 million to 21 million tonnes. Canada grew 18.6 million tonnes of canola in 2019-20, according to Statistics Canada data.

— Phil Franz-Warkentin reports for MarketsFarm from Winnipeg.