CNS Canada – Canola contracts on the ICE platform are trading near their lowest levels in more than a year, but could be running out of room to the downside.
With the North American harvest pressure easing and the South American soybean harvest still a number of months away, canola has window of opportunity where it could see a modest bounce, according to analyst Mike Jubinville, of ProFarmer Canada.
He said “bargain basement prices” were rumoured to be bringing in more Chinese export demand for canola, which was helping develop a baseline on the futures.
However, “the bearish influence of soy is certainly still there,” he added. He expected to see reductions in soybean exports out of the United States and a resulting increase in ending stocks, given the ongoing trade dispute between the U.S. and China.
If weakness in soybeans causes canola to break lower, Jubinville placed support in the January contract at C$475 per tonne, with the next downside target after that at C$450 per tonne.
On the other side, any weather scares during the South American growing season could provide the spark for a move higher in the oilseeds. However, farmers are also likely waiting to sell above the current market, with cash bids in the C$11 per bushel area seen as a target for many producers that could temper any advances, according to Jubinville.