The USDA reported oat stocks as of Sept. 1 at 71.8 million bushels, down 8.6% from the same date last year and the second lowest level of stocks estimated for this date in USDA data going back to 1975/76, or 42 years. The lowest level of stocks over this period was estimated for Sept. 1 2013 at 63 mb.
Sept. 1 stocks represent 34.8% of total estimated supplies for the 2017/18 crop year, which is the lowest level seen in four years. It is well below the 10-year average, which points to Sept. 1 stocks representing 39.6% of total crop year supplies; this could eventually result in a hike in forecast U.S. imports in the upcoming Oct. 12 WASDE report.
Oats accomplished something that other North American grain or oilseed markets failed to do on Monday by finishing higher. The December contract ended 1 1/4 cents higher, at $2.52 1/2 per bushel, reaching a four-week high and ending just below a test of resistance. Initial short-term resistance lies at $2.55/bu., the 33% retracement of the move from the contract's July high to September low. Further resistance lies at $2.54 1/2 which represents the contract's 100-day moving average.
While commercial selling resulted in a weaker Dec/March spread in Monday's session, this spread has strengthened over the past two weeks, given supportive commercial buying interest, which has saw the spread strengthen from minus 8 cents to minus 4 cents during the past two weeks (March trading over the December).
Another sign of support is found in CFTC data, which shows the net-long futures position held by noncommercial traders increasing in each of the past two weeks, after falling five of the previous six weeks. As of Sept. 26, investors held a long position of 1,119 contracts, which was the highest in four weeks.
Continued support from both the commercial and noncommercial side could result in a breach of resistance at $2.55/bu., and a further retracement to the 50% retracement of the downtrend discussed at $2.58 3/4/bu., with the next level found at $.267 1/2/bu.
Cliff Jamieson can be reached at firstname.lastname@example.org
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