CNS Canada — ICE Futures Canada canola contracts made steady gains during the week ended Wednesday, as traders positioned themselves ahead of Thursday’s release of the U.S. Department of Agriculture’s next supply and demand report.
“We’ve had a bit of a run over the past week and a bit; we popped off some oversold levels,” said Jonathon Driedger of FarmLink Marketing Solutions in Winnipeg.
The front-month March contract gained $11.60 to rise above the $520 mark.
Driedger said the contract also showed signs it was preparing to test technical resistance around the $526 level.
“We’ll see if it can push through that. This could trigger some technical buying,” he noted.
On the other hand, he said, it’s difficult to see canola dropping below the $500 level.
“They tried to press it below that for a period of time but they couldn’t,” he said. “I think at this stage of the game it looks like pretty good support.”
Canola did feel some pressure, though, as weather conditions improved in some South American soybean fields.
Weather concerns don’t seem to be as big an issue as they were last month, Driedger said.
“It suggests maybe that element is priced into the market right now.”
In the next week, he said, traders will likely roll into the May contract en masse.
“We still have more open interest in the March, so we’re probably not quite at the point where that transition is being made full bore, but certainly in the next week and a half you’re going to see more attention on the May contract.”
Last week Statistics Canada released its stocks report for canola. It pegged canola stocks as of Dec. 31 at roughly 12.2 million tonnes, down by about 1.3 million from the same point the previous year.
The report wasn’t surprising, Driedger said, but it did reinforce the belief that canola stocks aren’t that high.
“It was just a reminder that supplies are down,” he said.
— Dave Sims writes for Commodity News Service Canada, a Winnipeg company specializing in grain and commodity market reporting.