The short-term price trend for the crop remains high with no immediate sign of deflation, says FCC
By Kate Ayers
Staff Writer
Farms.com
Since September, the Intercontinental Exchange (ICE) canola futures have trended upwards. The harvest delays in the Prairies have supported this price movement.
The November canola futures contract neared an overhead chart resistance at $500 per tonne for many trading sessions and then moved above that level early last week, a Farm Credit Canada article said on Wednesday.
Indeed, the canola market will continue to be supported by the harsh fall weather. Producers have yet to harvest about half of the overall crop in Western Canada.
The market could rise to next level chart resistance at $507 per tonne, the article said. This jump would create the “swing target” and, following that mark, prices could rise to the range of $510 to $512 per tonne for the August highs.
Soyoil futures in Chicago have also risen from contract lows, which has supported the canola market.
“The extent and impulsiveness of the past couple weeks’ gain is impressive, breaking a major chart downtrend and identifying the Sept. 19 low (US 27.15 cents per pound) as the end to a long-term Elliot Sequence on price charts,” the article said.
Due to the thinned available canola supply in the Prairies, future contract spreads from November to January are tightening and cash basis is improving, the article said.
Indeed, Prairie cash bids in south-central Saskatchewan are reaching bids as high as $11 per bushel for deferred December to January delivery.
But the strengthening canola price will be deterred by a U.S. soybean market dealing with record 2018 yield prospects during trade tensions with China, the article said.
Producers should be also aware that corrections are likely to occur for canola prices and this price climb will not continue indefinitely.
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