There are strong signals that the canola market may be topping out. For those who haven't made use of the rally to hedge forward production, now is the time. Earlier last week we made a recommendation to hedge 15% of expected canola production.
On top of this, there are reports that the European rapeseed crop won’t reach earlier potential.
Nonetheless, canola is part of the global oilseed complex and cannot escape the fact that potential price upside will be limited to the prices of other vegetable oils (due to the high degree of substitutability between veg oils). The US soybean crop is in excellent condition and there are still plenty of soybeans available in Sth America.
Short-term short covering might see some further upside, but really it seems that once that is done, in order to sustain the rally we need to see something from beans and/or grains (which appears unlikely given strong US growing season conditions).