Canada Markets

Speculative Trade Lifts New-Crop Canola

Cliff Jamieson
By  Cliff Jamieson , Canadian Grains Analyst
Connect with Cliff:
November canola gained $3.90/mt on Tuesday, while showing a potentially bullish change in short-term trend by reaching a high that exceeded the high of the previous four days. The middle study shows stochastic momentum indicators trending higher, while the lower study shows the Nov/Jan spread weakening this week, a sign of a bearish commercial approach to trade. (DTN graphic by Scott R Kemper)

In Monday's trade, November soybeans flashed a short-term bullish signal by reaching a four-day high, or reaching the highest level traded in the past four sessions, while follow-through buying saw the move extended in Tuesday's trade.

A similar signal is seen in Tuesday's November canola trade, with the $3.90/metric ton surge higher resulting in the highest level reached in seven sessions. The middle study on the attached chart shows a bullish crossover of stochastic momentum indicators while deep in oversold territory and show the potential for a continued trend higher.

This move bears watching. Tuesday's move failed to test resistance of the contract's 50-day moving average at $492/mt, while also failed to sustain a move above $489.40/mt, which is the 38.2% retracement of the move from the May 9 high of $509.50/mt to the June 1 low of $477/mt.

P[L1] D[0x0] M[300x250] OOP[F] ADUNIT[] T[]

As well, despite concerns surrounding the possibility of tight old-crop stocks, the potential for unseeded acres across the western Prairies, along with dry conditions in the southern and eastern Prairies, the new-crop Nov/Jan spread has been weakening since early April, suggesting an increasingly bearish view of market fundamentals as determined by commercial traders.

Today's spread ended at minus $5.80/mt, which is the weakest seen over the life of the spread. The seven-day National Weather Service precipitation indicates chances of widespread moisture across the Prairies, which will be viewed as a mixed blessing depending on location but could add to the bearish sentiment held by commercial traders.

**

DTN 360 Poll

This week's poll asks which crop you believe will require the greatest focus and attention to detail when it comes to price risk management in the upcoming crop year. You can respond to this poll that is found on the lower right of your DTN Home Page. Thanks to all for their past contributions to weekly polls.

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

Follow Cliff Jamieson on Twitter @CliffJamieson

(ES)

P[] D[728x170] M[320x75] OOP[F] ADUNIT[] T[]
P[L2] D[728x90] M[320x50] OOP[F] ADUNIT[] T[]

Comments

To comment, please Log In or Join our Community .