Canada Markets
Commercial Bearishness an Anchor on New-Crop Canola
The media has printed a number of warnings surrounding new-crop canola and soybeans in recent weeks. A record South American soybean harvest could be followed by a record planted acreage of United States soybeans. AAFC's most recent estimates have included a 3% increase in acres seeded to canola in 2017 to a record 21 million acres. In addition, last week we discussed current estimates that suggest that palm oil production will sharply rebound this year following the drought-reduced harvest in 2016.
The attached chart shows the November canola daily chart struggling with various levels of resistance over the past few months. Over an eight-day period between Nov. 25 and Dec. 6, daily highs struggled with resistance in the $514 to $515/mt range.
Look ahead into January trade, the contract price struggled with resistance in the $507.70 to $508.80/mt range over a seven-day period between Jan. 19 and Jan. 27. While Monday's close was $2.80/mt higher, daily highs over the past six sessions could signal yet another area of lower resistance found in the $504.60/mt to $505.20/mt range.
The new-crop forward curve, or a line connecting consecutive daily closes, points to a bearish upward-sloping line for futures contracts in the 2017/18 crop year. Who's bearish and who's bullish? The lower-study on the attached chart shows the November/January spread breaking through chart support in Monday's trade, with the spread or carry increasing $.70/mt from minus $4.30/mt on Friday to minus $5/mt on Monday. This is a sign of growing commercial bearishness and bears watching.
P[L1] D[0x0] M[300x250] OOP[F] ADUNIT[] T[]
Nearby support lies at the contract's 50-day moving average at $501.40/mt, the 20-day at $500.60/mt as well as $500/mt, which represents not only a psychological support level, but also the 38.2% retracement of the move from the January low to the January high.
**
DTN 360 Poll
This week's poll asks the question:
With the Canadian government bracing for potential barriers to trade with the United States, what area of the agriculture industry do you think is the most vulnerable?
You can weigh in with your thoughts on this week's poll, found at the lower-right side of your DTN Home Page.
Cliff Jamieson can be reached at cliff.jamieson@dtn.com
Follow Cliff Jamieson on Twitter @CliffJamieson
(ES)
© Copyright 2017 DTN/The Progressive Farmer. All rights reserved.
Comments
To comment, please Log In or Join our Community .