WINNIPEG – ICE Futures canola contracts continued to hang above the psychologically-important C$500 per tonne mark during the week ended Aug. 22, but the real test could be in the coming weeks as harvest kicks into full gear.

The front-month November contract rose C$2.10 during the week to C$506.90 per bushel by Wednesday’s open.

As harvest begins farmers are beginning to unload some supplies, which could pressure prices in the days to come.

“Farmer selling is creeping back into the market,” said Keith Ferley of RBC Dominion Securities in Winnipeg.

He added key questions remain about how big the crop truly is as yields remain largely unknown at this point.

Funds are short in the market by about 15,000 contracts.

According to Ferley, short-covering looks to have come to a momentary halt.

“A break below C$500 could mean a re-test back to the low 490’s,” he said.

Canola remains expensive compared to other oilseeds, which could also weigh it down if and when the United States and China work out their trade issues.

“If the China trade war is settled and soybeans start trading, the product (value) will go up and crushers will buy,” said Wayne Palmer, an analyst with Agri-Trend in Pinawa, Man.

He said canola could dip as low as C$4.75 per bushel if soybeans work themselves down to the US$8.50 per bushel mark.

Milder temperatures have taken some of the weather premium out of the market too. While the mercury soared above 35 C in many Prairie locations over the past week, canola handled it very well, according to Palmer.