Canola Futures Decline Amid Strong Canadian Dollar and Weak Soybean Oil

The Winnipeg Commodity Exchange saw canola futures move lower in the week ended November 3, pressured by a strong Canadian dollar and weakness in Chicago Board of Trade soybean oil. Despite a potential slowdown in farmer sales providing some support, the market is expected to remain bearish from a technical standpoint. A broker noted that commodity funds could step in as sellers, dragging the January contract below C$290, while nearby resistance was pegged at C$300 and C$316.

Key Takeaways:

• Canola futures declined due to a strong Canadian dollar and weak soybean oil prices.
• A broker predicted that commodity funds could step in as sellers, dragging the January contract below C$290.
• Nearby domestic crusher demand could provide some support to cash values, but any advances are likely to be short-lived.
• Canada's large supplies of canola, estimated at 15% of the crop still in the field, need to find a home outside of traditional markets.
• Prices will need to see a significant drop before China will step in to make purchases, according to Mike Jubinville of ProFarmer Canada.
• The commercials will eventually work through the large visible supplies, leading to eventual market tightness that should underpin the market in the months ahead.

Statistics:

• 15% of Canada's canola crop is still in the field.
• Canola futures moved lower due to weak soybean oil prices.
• Nearby resistance for the January contract is pegged at C$300 and C$316.
• The strong Canadian dollar pressured canola futures.
• 50% of the Canadian wheat crop could grade as feed this year, weighing on Western barley and feed wheat futures.
• Farmer selling is drying up at the lows, according to a floor trader.

Sources:

• Resource News International
• COMTEX
• Andy Holloway, Resource News International (no date cited)
• Phil Franz-Warkentin, Resource News International (no date cited)
• Mike Jubinville, ProFarmer Canada (no date cited)