ICE canola weekly outlook: recent uptrend to continue

ICE Futures Canada canola contracts moved higher during the week ended October 23, breaking out to the upside from its recent month-long narrow trading range.
 
The positive technical bias sparked some chart based buying which helped to fuel the advances in the market. Weakness in the value of the Canadian dollar and solid end-user demand also contributed to the gains.
 
The main thing supporting the Canadian canola market was spillover from the strength seen in the Chicago soybean market. Much of which, was linked to tight supplies in the cash pipeline in the U.S., Jerry Klassen, manager of Gap Grains and Produits, in Winnipeg, said.
 
“We’re seeing the Nov/Jan (soybean spread) move to more of an inverse, and the Jan/Mar. So, I think that’s a sign, regardless if the yields are better, that the cash pipeline for beans is very tight,” Klassen said.
 
“And, until those spreads start to give way, canola is not going to fade,” he added.
 
Good end user demand going forward will also likely help keep canola supported, with domestic crushers running near full capacity and a big export program on the books for November and December.
 
Klassen noted that canola futures could climb as high as the C$515 to C$520 per tonne level in the January contract before hitting minor resistance. Major resistance for the January contract remains in the C$545 per tonne area.
 
“The market has kind of broken a downward trend line here,” said Klassen. “And, when it breaks that, there’s usually a chance for a C$20 to C$30 (per tonne) rally.”  
 
But, the large Canadian stocks will likely continue to overhang the market. It is still expected that Canadian canola production will be larger than Statistics Canada’s record large estimate of 15.96 million tonnes.
 
ICE canola weekly outlook: recent uptrend to continue
 
Terryn Shiells, Commodity News Service Canada
 
ICE Futures Canada canola contracts moved higher during the week ended October 23, breaking out to the upside from its recent month-long narrow trading range.
 
The positive technical bias sparked some chart based buying which helped to fuel the advances in the market. Weakness in the value of the Canadian dollar and solid end user demand also contributed to the gains.
 
The main thing supporting the Canadian canola market was spillover from the strength seen in the Chicago soybean market. Much of which, was linked to tight supplies in the cash pipeline in the U.S., Jerry Klassen, manager of Gap Grains and Produits, in Winnipeg, said.
 
“We’re seeing the Nov/Jan (soybean spread) move to more of an inverse, and the Jan/Mar. So, I think that’s a sign, regardless if the yields are better, that the cash pipeline for beans is very tight,” Klassen said.
 
“And, until those spreads start to give way, canola is not going to fade,” he added.
 
Good end user demand going forward will also likely help keep canola supported, with domestic crushers running near full capacity and a big export program on the books for November and December.
 
Klassen noted that canola futures could climb as high as the $515 to $520 per tonne level in the January contract before hitting minor resistance. Major resistance for the January contract remains in the $545 per tonne area.
 
“The market has kind of broken a downward trend line here,” said Klassen. “And, when it breaks that, there’s usually a chance for a $20 to $30 (per tonne) rally.”  
 
But, the large Canadian stocks will likely continue to overhang the market. It is still expected that Canadian canola production will be larger than Statistics Canada’s record large estimate of 15.96 million tonnes.
 
 

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