ICE canola weekly outlook: Rising market hits resistance

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Published: October 9, 2024

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Glacier FarmMedia | MarketsFarm — The ICE Futures canola market climbed to its highest levels in two months to start October, but ran into resistance and may now need an outside catalyst to continue the uptrend.

Economic stimulus measures announced by China in September contributed to the recent strength in canola, with a reversal of the market sentiment now weighing somewhat on financial markets. Crude oil has also backed away after its own recent strength, with those broader global market factors “taking the top off the canola market,” according to Calgary-based analyst Errol Anderson.

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He said the upward momentum could easily resume in canola, but said participants would be hesitant to take values much higher while the Asian markets were under pressure.

From a chart standpoint, Anderson placed the floor in the canola market at C$600 per tonne, with any moves towards that support level likely bringing in both speculative buying interest and end user demand. “I don’t see canola going below C$600 anymore.”

However, he also cautioned that the upside may also be limited and recommended farmers take any gains as pricing opportunities. “I think we’ve seen the bottom, but sell the rallies … because they won’t hold,” said Anderson.

He added that basis levels were another pricing signal to watch. Tightening basis levels would signal demand, “but if the futures climb and basis widens, that means the rally will be short lived.”

About the author

Phil Franz-Warkentin

Phil Franz-Warkentin

Editor - Daily News

Phil Franz-Warkentin grew up on an acreage in southern Manitoba and has reported on agriculture for over 20 years. Based in Winnipeg, his writing has appeared in publications across Canada and internationally. Phil is a trusted voice on the Prairie radio waves providing daily futures market updates. In his spare time, Phil enjoys playing music and making art.

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