Despite the threat of a record soybean crop in South America combined with an expected 113% year over year increase in U.S. ending stocks of soybeans, the March monthly canola chart shows a modest $3.50/mt gain in January and a more substantial gain of $17.30/mt so far this month while reaching a nine-week high in Friday's trade.
The attached graphic highlights the trend of the nearby continuous contract (red line) as it compares to its five-year seasonal index. While just one of many influences affecting trade, it remains encouraging just the same given the five-year trend that tends to move higher into late May/early June.
A word of caution -- DTN's description of the seasonal index as an influence on price trend suggests it is a "relevant indicator, although, by itself, far from conclusive."
Despite the 1.3 million metric tons year-over-year drop in estimated canola stocks as of Dec. 31, the nearby March/May spread has weakened $1.40/mt to minus $8/mt so far this month, a sign of growing commercial bearishness on the front-end, while cash basis is also weaker than where it was this time last year.
This market bears scrutiny.
Cliff Jamieson can be reached at firstname.lastname@example.org
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