Canada Markets

November Canola Testing Support

Cliff Jamieson
By  Cliff Jamieson , Canadian Grains Analyst
Connect with Cliff:
November canola lost $2.60/metric ton in Monday's trade, although bounced back to the mid-point of the session's range after reaching the contract's lowest point since Jan. 16. Trade held above support in the $493.50 to $494.80/mt range, while the Nov/Jan spread (lower-study) is reported at minus $5.60/mt and can be viewed as a neutral response overall by commercial traders. (DTN graphic by Nick Scalise)

Noncommercial selling weighed on new-crop November canola on Monday, given the unchanged Nov/Jan spread that points to a neutral response by commercial traders. The current spread represents a neutral 52.4% of full carry between the November and January contracts, with values below 33% viewed as bullish and above 67% viewed as bearish given DTN viewpoints.

Since Jan. 13, November canola has remained within a $20/mt range between $491/mt and $509.40/mt, while today's activity resulted in a bounce near the lower-end of the range to close above support and near the mid-point of the $5.40/mt range traded this session. Support can be found at $494.80/mt, the 61.8% retracement of the move from the contract's January low to the contract's February high, as well as $493.50/mt, the 67% retracement of the same uptrend. A breach of these levels along with $491, the Jan. 16 weekly low, could result in a slide back to the January low of $485.70/mt.

Latest revisions to supply and demand tables by Agriculture and Agri-Food Canada points to a 900,000-metric-ton drop in canola ending stocks to 1.1 million metric tons for 2016/17 given hikes in both forecast exports and to a lesser extent crush, which then becomes opening stocks for 2017/18. Both exports and crush remain at a pace that exceeds the new demand estimates, although how long this pace can continue is uncertain. The ratio of ending stocks to total demand for both 2016/17 (5.7%) and 2017/18 (5.9%) is expected to be found in single digits, not seen since 2011/12 (4.4%) and 2012/13 (4.2%).

A look at the average future price calculated on the continuous active chart for those two crop years are the highest seen in the past 10 crop years. In 2011/12, the average price calculated using ProphetX is calculated at $569.96/mt, while for 2012/13 was calculated at $610.99/mt. To-date, the 2016/17 average is calculated at $494.78/mt, while the last three crop years saw the average future in a tight range of $465.92/mt in 2013/14, $454.24/mt in 2014/15 and $478.56/mt in 2015/16.


DTN 360 Poll

What shifts in seeded acres do you think the industry will most likely face in 2017? You can share your thoughts on the latest poll, found at the lower right side of your DTN Homepage.

Cliff Jamieson can be reached at

Follow Cliff Jamieson on Twitter @CliffJamieson



To comment, please Log In or Join our Community .