Glacier FarmMedia — News of a tentative two-week ceasefire between the United States and Iran sent crude oil values sharply lower on April 8, with canola futures falling in sympathy. While the selloff broke the oilseed out of its nearby trading range, additional direction is expected to continue to come from developments in the Middle East.
May canola settled at C$704.90 per tonne on April 8, falling out of the sideways trading range it had held for the previous three weeks.
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From a technical standpoint, May canola had been creating a coiling pattern over the past month, with the break lower opening up significant room to the downside, said analyst Mike Jubinville. Looking at a chart, the next support comes in at C$700 per tonne and then around C$680.
However, seasonal price trends at this time of year generally point higher, said Jubinville.
While old crop canola supplies remain more than sufficient to meet demand, he added that reduced fertilizer applications due to high costs could be supportive in the longer term.
With the bearish technical signals on one side and supportive seasonals on the other, “the markets will just trade the war,” added Western Producer markets desk analyst Bruce Burnett.
