The canola market has drawn focus this week, with old-crop diverging from new-crop prices during the past two sessions, while front-end canola trade has diverged from moves seen in soybeans and soybean oil during a number of sessions in recent trade.
The attached November chart shows the contract achieving a weekly gain for eight consecutive weeks while reaching a fresh contract high in each of the past four weeks. The November closed $7.30/metric ton higher on April 1, reaching a contract high of $980/mt. Trade remains above all major moving averages, while the continuous November chart (not shown) shows no real chart resistance between current levels and the $1,065.80/mt high reached on the November 2021 chart.
This move follows The March 31 USDA Prospective Planting report that pegged United States acres planted to soybeans in 2022 at 91 million acres, well above the Dow Jones average of pre-report estimates of 88.8 million acres. It is also despite a sharp correction in crude oil this week that resulted in a weekly close below $100/barrel for the first time in five weeks.
The brown line on the first chart shows the Nov22/Jan23 spread which closed at $0.40/mt to end the week, a mildly bullish signal that has moved modestly higher in each of the past two weeks.
The blue bars of the histogram in the lower study shows the noncommercial net-long position falling by 4,511 contracts in the week ending March 29, the smallest bullish position seen in 26 weeks or six months. This position is down 38% from the all-time high reached on Jan. 10 of 74,055 contracts. The speculative trade remains cautious with prices in over-bought territory on the weekly chart (not shown), which will act to slow technical buying interest but can change quickly.
According to pdqinfo.ca, deferred basis across the nine regions of the prairies weakened on Friday for November delivery, ranging from $14.42/mt under the November in northern Alberta to $32.97/mt under in southwest Saskatchewan, with bids ranging from $955.78/mt ($21.68/bushel) to $937.23/mt ($21.26/bu).
Cliff Jamieson can be reached at email@example.com
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