WINNIPEG, Manitoba--ICE futures canola contracts ran into resistance after hitting their highest levels in five months on May 13, with a fresh catalyst likely needed to keep values pointed higher.
The November futures have gained roughly C$90 per ton over the past two months, hitting a five-month high of C$688.90 per ton on May 13. Recent strength in wheat, tied to production concerns in Russia, has led to broad speculative short covering that underpinned canola as well.
However, technical indicators were approaching overbought levels, according to analyst Errol Anderson of Errol's Commodity Wire. He said the contract was facing heavy resistance at C$595 per ton.
Anderson placed the next upside target after that at C$720 to C$725, but expected a pullback was more likely in the short-term.
"If canola goes another C$20 higher, it will get overbought," Anderson said, adding that domestic crushers were full for the time being while farmers are also watching the market and are likely to increase their sales as the November contract nears C$700 per ton.
Recent rains have helped improve moisture conditions across much of Western Canada, with weather through the growing season a key factor to watch going forward.
A possible downturn in equity and energy markets also "lies in the shadows," according to Anderson. He noted that equities were showing some strength, but will eventually "have a bad day (and) the commodity markets will drop."
Source: Commodity News Service Canada, news@marketsfarm.com
(END) Dow Jones Newswires
05-15-24 1700ET
