ICE weekly outlook: Canola enjoying broad-based support

CNS Canada –– ICE Futures Canada canola contracts are benefiting from developments down south.

The U.S. Commerce Department on Monday imposed antidumping duties on biodiesel imported from Argentina and Indonesia. The department claimed the fuel was being sold at prices below market value in the U.S.

The move was enough to lift soyoil in the U.S., which subsequently gave canola some added support.

“We think that has a positive effect on canola longer-term as well,” said Keith Ferley of RBC Dominion Securities.

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He pegs support for the dominant January contract at $503.50 a tonne.

Over the past few weeks, traders have been shifting out of the November contract in favour of January.

Traders will likely be watching the Canadian dollar closely over the next few days to see if it continues to fall. On Wednesday, the loonie plunged after the Bank of Canada decided not to move the interest rate.

“It looks like they won’t raise rates in December either,” said Ferley.

Other factors underpinning canola futures include snowfall in northern Alberta. Farmers have been working to try and get the rest of the crop off before winter, but Mother Nature hasn’t been co-operating.

“Chart-wise, we look kind of friendly,” Ferley noted. “If we continue this uptrend funds may continue to add to longs.”

On the flipside, he said, rain in northern Brazil has helped quell concerns over excess dryness in soybean fields.

“So global production of oilseeds might bump up here after some major concerns about the dryness they had.”

— Dave Sims writes for Commodity News Service Canada, a Glacier FarmMedia company specializing in grain and commodity market reporting.

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