CNS Canada — Canola contracts on the ICE Futures Canada platform held within a rather narrow range during the week ended Wednesday, but moved higher overall.
However, further gains will take an outside catalyst, according to a market analyst.
“There’s a very firm tone to the market,” said Errol Anderson of ProMarket Communications.
Fund traders, he said, had built a long position into soybeans and soymeal in the U.S., which was providing spillover support for canola.
“Until the beans break, canola will remain supported,” said Anderson.
However, he added, the one bearish influence in the background is the stock market. Anderson said he expects to see some weakness in global equity markets, which would spill into commodities as well.
From a fundamental standpoint, Anderson said good planting and growing weather in the U.S. was bearish in the near term, which could lead to a modest correction in the futures.
Psychological support in the new-crop November contract can be found at about $15 below current levels, at $500 per tonne, and then again at the former resistance of $496 per tonne, said Anderson.
“As far as going higher, the bull needs to be fed and we need something more bullish to hit the market,” he said, adding it’s likely still too early in the growing season for a weather scare.
— Phil Franz-Warkentin writes for Commodity News Service Canada, a Winnipeg company specializing in grain and commodity market reporting.