(Resource News International) — ICE Futures Canada canola contracts recently hit fresh contract lows in some months, but have managed to recover from those levels as short-covering and exporter pricing provide support.
But an analyst said the market remained relatively range-bound overall and would need some fresh fundamental news or outside influence to move decisively one way or the other.
“I think we’ll stay in this $15 to $20 range until we see something to break us out of it,” said Oakville, Man. market analyst Darren Frank of FarmLink Marketing Solutions.
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The May canola contract hit a low of $372.90 on March 15, which should be seen as a nearby support level. On the other side, the contract has been unable to see much strength above $390 for the past couple of weeks.
Frank expected canola would hold range-bound until closer to the spring, when traders will have a better handle on planting intentions. Market participants are generally anticipating an increase in canola acres, but Frank said there was still a lot of time before the crop is planted.
In the meantime, Frank said there were a few other issues that could sway canola values one way or the other.
A resolution to the Chinese restrictions on canola infected with the blackleg fungus would be supportive for prices, he said.
And he pointed out that drought concerns in parts of Saskatchewan and Alberta could also become more of a factor heading into the spring.
On the other side, the strong Canadian dollar will temper the ability to sell offshore, and also cut into domestic crush margins, he said.
The large South American soybean crop will also be closely watched, and could weigh on prices if production ends up above current projections, said Frank.
However, he said, demand for oilseeds remained strong. Basis levels in the country continue to narrow in, which Frank saw as a good sign that the demand is still there for canola.
