CNS Canada –– ICE Futures Canada canola contracts chopped around major support during the week ended Wednesday, as steady demand was countered by large supplies of oilseeds.
Most traders rolled out of the January contract and into March, a move evidenced by the massive volumes on Monday and Tuesday.
“People holding contracts may get nervous; they don’t want to get caught and have to sell amid low volumes at a price that works against them,” said Mike Jubinville of ProFarmer Canada in Winnipeg.
He pegged the $520 per tonne level as major support for canola, but cautions a move down to $510 could easily happen.
Traders have already begun to position themselves ahead of the Christmas break and could be hesitant to push prices too far one way or the other.
The pace of Canadian canola exports picked up recently, Jubinville noted, but with Brazil’s harvest looming, buyers will soon turn their attention to South America.
“The Brazilian crop looks record-big; Argentina has been too dry but is getting rain,” he added.
The next major report to be released from the U.S. Department of Agriculture is due out Jan. 12.
“The expectation is the USDA will boost yield numbers for soybeans so the crop will get bigger,” Jubinville noted. “It’s already projected as being record-large.”
While this could set the stage for canola to move lower, he said canola isn’t the type of commodity that plummets uncontrollably.
“Canola doesn’t so much collapse as leak lower.”
— Dave Sims writes for Commodity News Service Canada, a Winnipeg company specializing in grain and commodity market reporting.