ICE Futures Canada canola contracts moved lower during the week ended March 13, backing away from nearby highs as speculative profit-taking and steady farmer selling weighed on values.
Nearby direction is expected to come from the CBOT soy complex, although canola should lag to the downside if soybeans continue to weaken, said Ken Ball of PI Financial in Winnipeg.
"Canola will be pulled down by the soy market, but it doesn't have the same big crop looming on the horizon as the beans do," said Ball, "so it should stay a little sturdier."
Canola, he added, is already looking fairly expensive relative to the soy market, and end-user demand is starting to show signs of slowing down.
However, he said, canola prices will need to be stronger still compared to other oilseeds in order to ration more of that demand away from exporters and crushers and make sure supplies don't run out.
From a technical standpoint, the $635 level "is a major band of resistance," and it will take a quite a bit to get through, said Ball. On the other side, support comes in at the $600-$605 per tonne level.
He expected a break to the downside of that range was more likely than a turn higher in the near future, "but it will take a substantial down-move in the beans to do that."
In addition, there are still many growers with canola to move, and the signal that the bean market has peaked out in the near term should bring in more sales, said Ball.
-- Phil Franz-Warkentin writes for Commodity News Service Canada, a Winnipeg company specializing in grain and commodity market reporting.