The February rapeseed chart, as traded on the Euronext Paris market, shows a number of similarities to the nearby January canola chart and bears watching. As seen on the accompanying chart, the February rapeseed contract reached a high on July 10 at EUR382, while the January canola contract reached a peak of $535.20/metric ton a day later. Both reached a bottomed on Sept. 12, rapeseed at EUR361.75 while canola bottomed at $489.50/mt on the January chart.
This week's trade has so far seen a successful test of the 67% retracement of the move from the July high to September low on both the rapeseed and canola. After a second attempt this week, January canola closed above this 67% retracement at $520.20/mt in Wednesday's trade, ending the session at $521.10/mt after reaching a $522/mt high.
The February rapeseed contract ended above its 67% retracement line at EUR375.32 on Monday, finished below it on Tuesday, only to breach this resistance with a move EUR4 higher on Wednesday, the contract's largest one-day move in over three months. The move took out the contract's August high and closed just EUR3 below the high reached in July.
Both oilseeds have benefited from currency weakness relative to the U.S. dollar, although the Euro has weakened about 2.7% relative to the USD since the Sept. 12 low while the Canadian currency has weakened roughly 5.5% since the same date.
One key difference between these two charts is the actions of commercial traders. Today's Jan/March canola futures spread weakened to minus $6.50/mt, the weakest spread seen since Sept. 13 and is viewed as a neutral to bearish spread. In contrast, the February rapeseed chart shows the Feb/May spread strengthening in two of three sessions this week to a weak carry of EUR2.
A move above the EUR382 high would lead to a seven-month high reached on the rapeseed chart, while the long-term stochastic momentum indicators on the monthly chart are trending higher while near the middle of the neutral zone on the chart and may signal a continued move higher.
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Cliff Jamieson can be reached at firstname.lastname@example.org
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