In Monday's trade, November soybeans flashed a short-term bullish signal by reaching a four-day high, or reaching the highest level traded in the past four sessions, while follow-through buying saw the move extended in Tuesday's trade.
A similar signal is seen in Tuesday's November canola trade, with the $3.90/metric ton surge higher resulting in the highest level reached in seven sessions. The middle study on the attached chart shows a bullish crossover of stochastic momentum indicators while deep in oversold territory and show the potential for a continued trend higher.
This move bears watching. Tuesday's move failed to test resistance of the contract's 50-day moving average at $492/mt, while also failed to sustain a move above $489.40/mt, which is the 38.2% retracement of the move from the May 9 high of $509.50/mt to the June 1 low of $477/mt.
As well, despite concerns surrounding the possibility of tight old-crop stocks, the potential for unseeded acres across the western Prairies, along with dry conditions in the southern and eastern Prairies, the new-crop Nov/Jan spread has been weakening since early April, suggesting an increasingly bearish view of market fundamentals as determined by commercial traders.
Today's spread ended at minus $5.80/mt, which is the weakest seen over the life of the spread. The seven-day National Weather Service precipitation indicates chances of widespread moisture across the Prairies, which will be viewed as a mixed blessing depending on location but could add to the bearish sentiment held by commercial traders.
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Cliff Jamieson can be reached at email@example.com
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