CNS Canada — ICE Futures Canada canola contracts moved lower during the week ended Wednesday, breaking below nearby chart support in the process.
The March contract fell below the $460 per tonne level during the week for the first time in nine months, but managed to recover to settle at $462.80 on Wednesday.
A correction is possible, but from a chart standpoint the next downside target comes in at the $445-$450 area, said Mike Jubinville of ProFarmer Canada.
“There are underlying features that say that the downside risk may be limited,” he said. However, he added, “we could still test a little lower” in the near term.
Read Also
China soybean imports hit record June high on strong Brazil shipments
China’s soybean imports hit the highest level ever for the month of June, a Reuters calculation of customs data showed on Monday, driven by a surge in shipments from top supplier Brazil.
The price action suggests that cash prices in the countryside will also be trending lower, which means prices will eventually get to a point that will cause farmers to stop selling, said Jubinville.
Better pricing opportunities will arise in the last quarter of the marketing year, when North American weather uncertainty comes to play, he added.
Rising world vegetable oil markets, together with a relatively sideways trend in CBOT soybeans despite burdensome supply data, should also be providing underlying support for canola, he said.
— Phil Franz-Warkentin writes for Commodity News Service Canada, a Winnipeg company specializing in grain and commodity market reporting.
