Strength in Chicago soybeans and good demand is moving canola futures back toward the contract highs hit in September.
Canola is pushing upside chart limits and modest corrections are likely going forward, but the fundamentals remain supportive and "the trend is up until further notice," said analyst Mike Jubinville of MarketsFarm Pro.
While activity in the Chicago Board of Trade soybean market remains a key driver for canola, "the demand for canola, in and of itself, has also been quite powerful," Jubinville added. "We are now in a demand-pull environment, whereas typically we are supply-push - where growers are just pushing supply into the marketplace. “
He added that a demand-driven market is a situation "that has not emerged, not just in canola but for grains and oilseed markets in general, for almost a decade."
The unique situation "is providing lift across the spectrum . . .amazingly in the midst of harvest.”
From a chart standpoint, long-term resistance is close in the $535 to $540/tonne area. The November contract traded as high as $533.30 on Sept. 21 and settled at $525.40 on Oct. 7. Breaking above resistance will take support from outside vegetable oil markets, such as palm oil and soyoil, Jubinville said.
Such a move is possible, he said, as canola is still cheap compared to other oilseeds.
"It's not overvalued relative to competing products."
November canola: source - Barchart
Source: DePutter Publishing Ltd.
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