WINNIPEG, Manitoba--Nearby canola on the Intercontinental Exchange fell below the C$600 per tonne mark, but there may be signs prices could be approaching a level of support.

The March canola contract lost C$17.10/tonne during the week ended Feb. 7 to close at C$593.10, while the May contract dropped C$18.60/tonne at C$599.40. Despite the significant losses over the course of the week, canola made up ground later in trading on Feb. 7.

Winnipeg-based trader Ken Ball of PI Financial said canola has traded relatively weak compared to other oilseeds, due to a combination of short positions pressuring prices and long liquidation. However, some of that pressure may be easing off.

"We did a very crisp rebound and that rebound (carried) on heading into the close," he said. "C$580/tonne was a possible support area. The next support was probably C$550, but the C$580 level basically held."

"That doesn't tell us we've got a low in place, but it's a possible support area. Of course, we're kind of due for some profit-taking by the shorts as well."

Weaker soybean and soyoil futures in the United States have also pulled canola prices down and with South America beginning its soybean harvest, Ball added some canola growers have started to sell at the lower prices in order to cut their losses.

"I sensed in the past week that the frustration level was getting high and they were starting to dump some canola," he said. "Buyers are now watching the speculative shorts in the market and they're quite happy to let the shorts continue to sell and sit back and watch. But the closer we get to spring, the more the buyers are going to have to start doing some covering and more buying in case of a weather issue popping up."

Eventually, canola will hit a price point which will attract more export demand and in turn, raise prices, according to Ball.

"We anticipate that somewhere between C$600 to maybe C$550/tonne will be a possible band in which canola will probably level off at going into spring," he said. "Buyers can't sit on their hands forever. If they don't get a little bit more aggressive in their buying, they could get caught in a weather rally."


Source: Commodity News Service Canada, news@marketsfarm.com


(END) Dow Jones Newswires

02-07-24 1656ET