Canada Markets

Despite recent weakness in both wheat and corn, oats have rallied since reaching a May 19 low of $3.26 1/2/bu, reaching an intra-day high of $3.82 1/2 in Monday's trade. This seems a seasonal move for the oat market, with the continuous daily chart pointing to a 61 3/4 cent move between May 22 and June 7 in 2013 and a $1.38/bu move between May 31 and June 12 in 2012.

Monday's move stalled near the 50% retracement of the move from the February high to the May low at $3.84 1/2/bu, with prices settling near the 38.2% retracement of the same rally at $3.71/bu. Monday's trading bar could be viewed as a Doji bar as studied on candlestick charts, with the bar forming a cross with the open and close at the same price level. In Monday's case, they happened to be just 1/4 cent apart.

The second study represents the daily stochastic momentum indicators, which could be indicating early stages of rolling over, led by the sideways-to-lower trend in the faster-moving %k line (blue line). A crossover of indicators while in overbought territory, above 80% or the horizontal red line, would be viewed as a bearish move.

The third study indicates the July/Sept spread, which is found to be in a bullish inverse at plus 16 3/4 cents, although weakened 1 1/2 cents during this session, indicating an easing of bullish sentiment among commercial traders.

Not shown are the actions of the noncommercial traders. As of recent CFTC data, noncommercial traders have pared their net-long position over each of the past two weeks to 732 contracts as of May 27.

Weekly U.S. data from the Crop Progress report indicates that total oat plantings are at 95%, up from 89% last week and just slightly behind the five-year average of 97%. The overall crop is rated at 62% good to excellent as compared to the 56% rating from one year ago.

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

Follow Cliff Jamieson on Twitter @CliffJamieson

(AG)

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