WINNIPEG, Manitoba-- There is presently little upside to the new crop November contract on the Intercontinental Exchange, according to analyst Errol Anderson of ProMarket Communications.
Anderson pointed to losses in Malaysian palm oil and weakness in China's soymeal market as weighing on ICE canola values, with more pressure coming out of South America.
"The [soybean] production in Brazil is mind blowing. Their production is covering up the losses in Argentina," he explained.
On April 11, the United States Department of Agriculture bumped up its call on the Brazil soybean harvest by 1 million tons to a record 154 million tons in the department's latest supply and demand report. Meanwhile, drought-ravaged Argentina saw its production chopped by six million tons to 25 million. At one time, there had been hopes of Argentina reaping 40 million tons or more of soybeans.
With all the pressure on canola Anderson said that the November contract is poised to again fall below C$700 per ton. He noted the major support level is at C$680/ton. Meanwhile, resistance for November stood at C$740/ton.
"That's the 'chop zone' until we get into the growing season and we see how things are," he said, noting there's little chance of canola prices collapsing. He suggested if there were enough fresh bullish news the price could climb to as high as C$775/ton.
Although Statistics Canada will release its prospective plantings report before the end of April, Anderson said it appears the report is likely to have little effect on canola prices. Rather, it's best to keep an eye on crush margins, especially with soymeal not doing well in China.
Source: Commodity News Service Canada, news@marketsfarm.com
(END) Dow Jones Newswires
04-12-23 1635ET
