CNS Canada — The canola market will likely be tested in coming days as harvest pressure, both north and south of the border, intensifies.

While futures enjoyed a bounce upward following a bearish report from the U.S. Department of Agriculture on Tuesday, the technical bias appears to be pointed lower.

The front-month November contract at ICE Futures Canada is facing resistance in the low $490s, according to Keith Ferley of RBC Dominion Securities in Winnipeg.

“I don’t think soybeans can hold the bounce for (canola) too long because harvest is going to expand in the U.S.,” he said.

Bean oil futures are also not as strong as Ferley would like. “They’re lagging here which makes me nervous, maybe this bounce in canola isn’t as strong as what we’d like to see.”

The next rung down for the November contract is at $482.50, he said, but it could also fall lower than that.

“I think we’re going to see this thing go down to the $480 or $479 level.”

Other factors weighing on the market include lacklustre export demand and recent strength in the Canadian dollar.

“However, crush margins are improving, which is bringing in some buyer interest,” he said. “There’s been light sellers here the past week and they’re adding to their short positions.”

Yields continue to come back better than expected as harvest across the Prairies pushes north, Ferley added.

Weather conditions could soon bring combines to a halt, though, as rain is pushing into Alberta.

“This could delay harvest. We need it, though, so I don’t think people will complain,” said Ferley.

— Dave Sims writes for Commodity News Service Canada, a Winnipeg company specializing in grain and commodity market reporting.