Canola futures on the ICE Futures Canada trading platform were stronger during the week ended Wednesday (Oct. 9), finding some spillover support from the gains seen in outside oilseed markets.
Technical based buying also underpinned values, with canola futures seeming to find good support in the C$475-$480 per tonne level.
Steady commercial demand and weakness in the value of the Canadian dollar contributed to the gains as well.
Though prices were firmer during the week, the path of least resistance is likely pointed lower in canola, said Ken Ball of PI Financial in Winnipeg.
"It will only take a little bit of weakness in the U.S. markets to pull canola down again, and I suspect that might be coming," he added.
Pressure from the advancing harvest in Western Canada and expectations that the canola crop will be larger than 16 million tonnes should be bearish going forward.
In the shorter term, the canola market is expected to remain fairly neutral due to uncertainty surrounding how big the U.S. soybean crop will end up being this year.
The situation in the U.S. is unclear is because of a lack of reports from the U.S. Department of Agriculture confirming yields and harvest progress, due to the U.S. government shutdown, now in its second week.
There have been private estimates released recently for the U.S. soybean crop, but traders don't trust them as much as the USDA reports.
"The USDA's survey is far bigger and better than any private estimate," said Ball. "So, the market is going to miss that and its going to be a bit nervous as a result."
The canola and soybean markets should remain neutral until the U.S. government ends its shutdown and the USDA starts issuing reports again, or until the U.S. soybean harvest is far enough along that traders feel confident about yield reports, said Ball.
"The market is just sort of killing time to a certain extent, waiting until the situation in the U.S. clarifies itself a little bit," said Ball.
-- Terryn Shiells
writes for Commodity News Service Canada, a Winnipeg company specializing in grain and commodity market reporting.