ICE Futures Canada canola contracts held within a very narrow range during the week ended Nov. 29, but finished with small losses in the most active nearby contracts despite gains in CBOT soybeans.
Canola remains right in the middle of a well-established range, with the January contract facing very solid support to the downside at around $490 per tonne and resistance the other way at $500. It will likely take some sort of outside influence to break values out of that range, as the large supply situation remains a burdensome influence on the upside but good demand is lurking at the lows.
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Weakness in the Canadian dollar, which dropped by nearly a cent relative to its U.S. counterpart during the week, was supportive for canola. However, soyoil futures dropped to the low end of their recent trading range and the net impact on crush margins was relatively neutral.
U.S. markets were shut down Thursday, Nov. 28 for Thanksgiving and only opened for a shortened session Friday. The holiday kept some participants to the sidelines and led to some choppy activity overall.
Supposedly there is an old saying among grain traders that “the bulls get Thanksgiving and the bears get Christmas.” The first part of that adage held true for soybeans this year, with nearly all of their gains coming Friday. Good weekly export demand provided the trigger for the rally in beans, but there was some uncertainty over how long the advances may hold up.
U.S. soybean exports are running well ahead of the previous year’s pace, although much of that buying interest has come from China. In the past, China has been a bit of a wild card in the market and has been known to cancel purchases if it can get a better price by doing so.
For the grains, Chicago and Kansas City wheat futures moved higher during the week, while Minneapolis futures were unchanged in the most active months and corn settled slightly lower.
Issues with Argentina’s wheat crop were somewhat supportive for the U.S. futures, as the country’s government pegged production well below other official estimates at only 8.5 million tonnes.
Chart-based buying kept wheat underpinned as well, as the Chicago futures managed to move above nearby resistance.
On the other side, global wheat supplies remain large and the International Grains Council raised its projection for the world wheat crop in 2013-14.
The gains in wheat and soybeans were a little supportive for corn, but the record-large U.S. crop kept corn prices under pressure for the most part. The March contract in Chicago held within a narrow 10-cent range during the week, just above three-year lows of US$4.20 per bushel. A move below that point could trigger additional speculative selling, although steady export and domestic crusher demand should provide some support.
