CNS Canada — ICE Futures Canada canola contracts moved higher over the past week, but may be running into resistance to the upside.

“I’m sensing that canola is at the top end of the range,” said Errol Anderson of ProMarket Communications in Calgary, noting much of the recent strength was tied to advances in Chicago Board of Trade (CBOT) soybeans and soymeal.

“The bottom line is certainly the beans and the meal,” he said. While Chicago futures were finding support from weather concerns in Argentina, expectations for a large Brazilian crop should mute any additional strength.

In addition, Anderson said, the canola carryout for the current marketing year could hit 2.5 million tonnes, with the likelihood of large seeded acres this spring potentially leading to ending stocks of 3.5 million tonnes by July 2019.

With those large supply projections, Anderson recommended farmers price some new-crop canola already.

Overall, he estimated, the futures may only have about $3-$5 more to the upside, “but I don’t know if we have the ammo to move much higher.”

On the other side, he thought canola futures could move down by $15 per tonne from current levels.

With the upside limited on the futures, Anderson said farmers with old-crop canola to sell should keep their eyes open for spot pricing opportunities.

While there is no shortage of canola, buyers will still be looking to fill commitments from time to time and offering premiums for delivery.

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