ICE Futures canola contracts fell hard to end the month of May, dropping to levels not seen in more than two years.
While the oversold market may be due for a correction, there could also still be more room to the downside.
While canola is usually the leader in the relationship with European rapeseed, the past six months has been the other way around and MarketsFarm analyst Mike Jubinville thinks the weakness in rapeseed could leave canola open to more downside as well.
Looking at the weekly chart, Jubinville expects the July canola contract that settled at $649.50 per tonne yesterday could easily drop into the $500 per tonne area.
On the other side, a correction to the 20- or 50-day moving averages would see prices move back above $700 but would still leave the market in a long-term downtrend.