Winnipeg (CNS Canada) – ICE Futures Canada canola contracts ran into some major resistance over the past week before turning lower, with more downside possible as seasonal trends should weigh on values.
“Seasonally speaking, we’re in the neighborhood where canola makes the turn down,” said Mike Jubinville of ProFarmer Canada, noting that canola typically sees some softness after seeding is complete and farmers look to clean out their old crop supplies.
Good rains across the Prairies in recent days were also bearish for values, as the moisture helped alleviate some of the worries that had propped up values earlier in the spring.
However, the longer-term forecasts are still calling for hotter and drier summer conditions, which should provide some support, said Jubinville.
From a chart standpoint, canola is trading right near the top of a long-term trading range. The C$540 per tonne level has provided solid resistance for the front-month contract for a number of years and Jubinville said it would likely take an outside catalyst to break higher.
The “on-again, off-again” trade dispute between China and the United States was another factor being watched, according to Jubinville. While concerns over Chinese tariffs on U.S. soybeans have weighed on beans, Canadian canola remains somewhat immune from that dispute.