Canada Markets

The canola trade received yet another reminder of the selling interests piled up at the $600/metric tonne level in today's trade. Canola reached a high early this morning of $602/mt, catching the spill-over from the U.S. soybean market that was rejoicing about the release of positive United States export data.

The gains were not to last, as the tides turned in the U.S. soybean trade based on news indicating the potential of a greater-than-expected Brazilian soybean crop, while technical selling in the canola pit due to standing sell-orders in the $600/mt range kicked into gear. Canola closed at $592.50/mt in today's trade, down $3.50/mt during the session and $9.50 below the session high.

Since the March canola futures entered its current trading range in November, canola futures have attempted to breach the resistance of the $600/mt level on five occasions. Exactly one month ago, on Dec. 17, canola climbed to a high of $600, but was pushed $10.80 lower to close at $589.20. This same situation occurred Dec. 6, Nov. 6 and Nov. 5, five times in total. On Nov. 5, the future was pushed $15.10 below its $601.10 high, to close at $586/mt. On average, the close on the five days was $9.06 below the high that was reached.

The short-term trend for canola still remains higher, Canola trade continues to trade above its 20- and 50-day moving averages. Should the sell-orders dry up and the $600 level eventually be breached, additional resistance will be met at the contract's 38.2% retracement of its September through December downtrend at $602.40/mt, while the next resistance level will be the contract's 50% retracement at $613/mt.

Cliff Jamieson can be reached at cliff.jamieson@telventdtn.com

© Copyright 2013 DTN/The Progressive Farmer. All rights reserved.