ICE Canada Weekly Outlook: Canola Holds Above Lows, China Investigation Hangs Over Market

WINNIPEG, Manitoba--The ICE Futures canola market held above major chart support during the week ended Wednesday as uncertainty over a Chinese anti-dumping investigation tempered attempts at moving higher.

The most-active November contract fell sharply to start September on news China was retaliating against Canadian tariffs on Chinese electric vehicles by probing Canadian canola imports. The investigation has yet to result in any action on China's part and canola recovered after its initial bearish reaction.

However, questions over disruptions to canola sales to Canada's largest export customer continue to hang over the market.

"We're right back down to an important level of price support," said David Derwin, commodities investment adviser with Ventum Financial in Winnipeg.

The November contract settled at 569.30 Canadian dollars per metric ton on Wednesday, only slightly above the low for the latest move of C$565.00 per ton. The next support comes at the August low of C$561.40 per ton, but if the market breaks below that there are no major support levels on the weekly chart until C$500 per ton.

"It's a very important level that we're at right now," Derwin said.

From a chart standpoint, values are pointing lower "but that doesn't mean we can't have a rally," Derwin said. If there is a corrective bounce, he said it might be worthwhile for farmers to increase their sales and look for hedging opportunities.

"Financial gravity is certainly pulling on canola," Derwin said, adding that "it's not just a canola situation," as soyoil and crude oil were also moving lower.

Beyond the bearish technical signals, the Canadian canola harvest is still in its early stages with varying yield reports across the Prairies.

If current levels don't hold and if the outside markets don't hold, Derwin expected canola has more room to the downside.

Statistics Canada is scheduled to release updated production estimates on Sept. 16, which could provide some nearby direction depending on how much weight market participants place on the model-based data.

Source: MarketsFarm, news@marketsfarm.com

(END) Dow Jones Newswires

September 11, 2024 17:13 ET (21:13 GMT)

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