CNS Canada — Bearish headwinds facing the canola market may have gotten slightly worse, after the U.S. Environmental Protection Agency announced it was considering cuts to biofuel requirements in U.S. fuel.
The EPA said Tuesday it was looking for feedback on proposed reductions to the renewable fuel obligations in the 2018 and 2019 Renewable Fuel Standards (RFS).
The soyoil market tanked soon after the announcement was made, turning from a slightly higher position to sharply lower.
Canola also lost ground on the day, sinking below the $490 per tonne mark.
That bearish push will likely continue in the next few days, according to a trader in Winnipeg.
“We probably will have the funds back in on the sell side adding to their shorts with this technical weakness,” said Keith Ferley of RBC Dominion Securities.
From a technical viewpoint, canola has held up remarkably firm compared to its soy counterpart over recent days. Exporter pricing was one of the factors propping up the futures, Ferley said.
“That buying now seems to be less aggressive and backing away from the market,” he said.
The next level of support for canola is around the $482.50-$483.50 range, he said.
As for overhead resistance, he doesn’t see the market hitting the $500 mark anytime soon. “Technically we’re looking weak.”
On the other side, harvest delays in Alberta and parts of Saskatchewan were bullish for prices.
The Canadian dollar has also backed off recent highs and sunk under the US81-cent mark.
“It looks like it (the loonie) is vulnerable to more downside which would be supportive,” Ferley added.
— Dave Sims writes for Commodity News Service Canada, a Winnipeg company specializing in grain and commodity market reporting.