Canada Markets

A more than 20-cent drop in the nearby soybean market resulted in a weak close in canola, despite a greater than 1/2 cent move lower in the Canadian dollar which limited the losses.

The nearby January canola contract ended $5.50 per metric tonne lower at $416.90/mt, moving through three levels of chart-based support in the process. First was trendline support, which has been in place since Sept. 22 when this fall's uptrend began. This support was found at $423.20/mt.

Next was the contract's 50-day moving average, found at $420.30/mt, which was the first close below this support since Oct. 24. Last of all, retracement support was at $420.20/mt, which represents the 50% retracement of the move from the contract's September low of $394.80/mt to the November high of $445.60/mt.

Fibonacci retracement theory could point to $414.20/mt as the next downside target, which represents the 61.8% retracement of the same uptrend.

Today's trading bar could be viewed as a bearish outside day, with today's trading range of $11.80/mt engulfing the $5.30/mt trading range traded in yesterday's trade, while today's close at the lower end of the trading range can be viewed as a short-term signal of the future short-term direction.

Just the same, commercial traders are showing bullish signs, with the January/March spread ending at a $1.60/mt inverse (January trading over the March) after moving to a weak inverse in yesterday's trade. A further signal is seen with a slightly narrower basis for spot grain purchases, with Friday's average prairie-wide basis at $20.58/mt under the January, while today's spot delivery basis is indicated at $18.68/mt under the January future.

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

Follow Cliff Jamieson on Twitter @CliffJamieson

(ES)

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