WINNIPEG, Manitoba--After a string of four straight losing sessions, the ICE Futures March canola contract had regained some strength by Wednesday.
Limited and choppy trading in nearby soybean contracts had pulled down canola for most of the week, according to Winnipeg-based independent trader Jerry Klassen.
"When the March got up to C$868 to C$870 (per metric ton)...there was still some farmer selling at the higher levels," he said. "Everyone who wanted to sell at that level has likely done so at this time and secondly, (farmers) are not going to make any sales until mid-January."
However, on Tuesday and Wednesday, canola prices made a comeback, with the March contract rising by C$11.50 per metric ton in that span.
"We're seeing some strength in the (soyoil) futures here. It's largely setting the direction for the canola," Mr. Klassen said. "Canola is garnering some of that strength, spillover support into the domestic crush margins."
Mr. Klassen added that commercial stocks are at 1.2 million tons, which he considers to be "snug." Add in limited farmer selling and an inverse in the ICE Futures market, and he believes canola is striking a bullish tone.
"You've got the bean oil and the bean meal improving the crush margin structure and it's giving us a steady tone," Mr. Klassen added. "We're kind of winding down for the holiday season, but we could see the funds start to come in here on the buy side because the market has held above the 20-day average over the last two days."
He expects a softer tone until New Year's Day.
"You have outside influences. It looks like there are beautiful (soybean growing) conditions in Brazil. Argentina's on the dry side, but they still have time," Mr. Klassen said. "The commercial demand kind of goes to sleep over the holiday season, until the second week of January."
Source: Commodity News Service Canada, news@marketsfarm.com
(END) Dow Jones Newswires
12-21-22 1623ET
