MarketsFarm – ICE Futures canola contracts climbed above chart resistance to hit their highest levels in six-months on July 29. While there is more room to the upside, farmer selling could temper additional gains.

Fund traders adding to long positions together with solid export demand, especially from Europe, accounted for much of the recent strength in canola, according to Keith Ferley of RBC Dominion Securities.

“The farmer has offers above the board, and the board will keep running up to get them to sell,” added Ferley. He expected to see continued scale-up selling as price targets are hit on the way up.

The November contract is facing resistance in the C$490 to C$495 per tonne area. After that, the highs in January around C$500 represent the next target.

The upside in the futures will depend on country basis levels, with cash prices that pencil out to C$11 likely triggering farmer sales, according to Ferley.

The looming harvest could also limit the upside. Canola crops are in the pod filling stage in many areas of Western Canada, with ample subsoil moisture pointing to generally good production prospects despite some problem areas, said Ferley.