Canada Markets

November Rapeseed Breaks Lower

Cliff Jamieson
By  Cliff Jamieson , Canadian Grains Analyst
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November rapeseed closed lower for a fourth session on Aug. 17, taking out the July low to reach the lowest trade in more than six months. Today's close was below the 50% retracement of the move from the contract low to contract high at EUR 615.12/mt, while continued weakness could lead to a further move to the 61.8% retracement at EUR 554.86/mt. The Nov22/Feb23 spread (first study), has moved to minus EUR 5.75/mt, the weakest close during the life of the spread. (DTN ProphetX chart)

The sideways move seen on several oilseed and vegetable oil charts may have come to an end for Matif rapeseed in Europe, which broke through support on Wednesday. The November contract ended EUR 9.50/metric ton lower at EUR 615/mt, a fourth consecutive lower close that has seen the price drop by EUR 45/mt. This is the first four-day slide seen since July 5, while a three-day drop in price from July 19 to July 21 resulted in a larger loss of EUR 51.25/mt.

Today's move pushed below support of the July low of EUR 612/mt to reach a low of EUR 605/mt, the lowest trade on the November contract since Feb. 15, or more than six months.

Today's move also closed below the 50% retracement of the move from the contract low to the contract high, calculated at EUR 615.12/mt. This is the second time this support has been tested, while the first close below this level. Continued selling pressure could result in a further move lower to the 61.8% retracement, calculated at EUR 554.86/mt.

As seen in the first study, the Nov22/Feb23 spread moved back into a bearish carry as of Aug. 10, while closed at minus EUR 5.75/mt on Wednesday. This is the weakest spread seen on this date for at least 20 years.

While not seen on the attached chart, the rapeseed/canola spread, measured in United States dollars/metric ton, is historically weak at $4.75/mt USD at today's close (canola trading higher than rapeseed). This time last year, canola traded at a $54.01 USD/mt premium to rapeseed, linked to the prairie drought. Prior to 2021, the spread has not traded this narrow on this date since August 2009, or the 2009-10 crop year. On average over the past five years, rapeseed has traded at a $38.59/mt USD premium to canola, which could prove bearish for canola trade.

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