Canada Markets
January Canola Flirts With Trading Range Highs
January canola has ranged over an $11.60/metric ton range over the past four weeks, while Monday's high came within $0.90/metric ton of testing the higher-end of this range.
Monday's trade resulted in this contract closing $1/mt higher at $463.50/mt, its third consecutive higher close. Support this session lies at the 20-day moving average at $461.60/mt and the 50-day at $461.30/mt, while Monday's close was above the 38.2% retracement of the move from the October high to October low at $463.10/mt for the second time in six sessions. A sustained move above this resistance could lead to a test of the 50% retracement level of $465.80/mt and the high of the four-week range at $466.10/mt.
The first study shows momentum indicators drifting sideways in the neutral zone of the stochastic momentum chart for more than one month as traders struggle for direction in this market.
P[L1] D[0x0] M[300x250] OOP[F] ADUNIT[] T[]
The lines on the second study point to supportive commercial activity under this market, with the brown line representing the January/March spread and having narrowed from minus $9.60/mt to minus $8.70/mt over the past 10 days. This continues to reflect a bearish view of fundamentals, roughly 77% of full commercial carry, but the narrowest spread seen in over one month.
The red bars on the lower histogram shows a potential for noncommercial short-covering also a supportive feature for this market. This bearish net-short position was pared slightly in Nov.12 data for the first time in four weeks, from a net-short futures position of 78,794 contracts to a net-short of 78,150 contracts.
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Cliff Jamieson can be reached at cliff.jamieson@dtn.com
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