Canola's five-year price probability, just one of the six factors that makes up DTN's six factor approach to market analysis, points to last week's price resilience seen in the crop's prices despite the negative fundamentals impacting the larger soybean market.
As seen on the attached chart, the weekly close on the nearby May contract last week was $522.90 per metric ton, as indicated by the red bar. This signals the nearby canola contract ending in the top 30% of the price range traded for the week over the past five-years. The blue bar marks $517/mt as being the point that marks the top 33% of the five-year price range, which may be viewed as a simplistic marketing strategy.
While many of canola's price signals stem from the much larger soybean market, note that last week's $9.96 per bushel close on the May contract places soybeans in the lower 34% of the price range traded over the past five months.
The current week could prove a different story, with canola weakening relative to soybeans on Monday, with May canola down $5/mt against the May soybean loss of 1/2 cent. Monday's trade was linked to weakness seen in palm oil, rapeseed and soybean oil, combined with the impacts of a stronger Canadian dollar trade. Noncommercial liquidation of soybean oil futures could prove to be the anchor on the canola market, with the net-long soybean oil position reported at 43,464 contracts as of the CFTC's March 7 report, down from a record 160,160 contracts on Nov. 1 and the smallest net-long held in 30 weeks or since mid-August.
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