Canada Markets

January Canola Flirts With Trading Range Highs

Cliff Jamieson
By  Cliff Jamieson , Canadian Grains Analyst
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January canola came within $0.90/metric ton from testing the highest level traded over the past four weeks, closing higher near the middle of the session's range. The lines on the second study point to continued supportive commercial activity, while the red bars of the lower histogram show noncommercial traders paring their bearish position for the first time in four weeks as of Nov. 12. (DTN ProphetX chart)

January canola has ranged over an $11.60/metric ton range over the past four weeks, while Monday's high came within $0.90/metric ton of testing the higher-end of this range.

Monday's trade resulted in this contract closing $1/mt higher at $463.50/mt, its third consecutive higher close. Support this session lies at the 20-day moving average at $461.60/mt and the 50-day at $461.30/mt, while Monday's close was above the 38.2% retracement of the move from the October high to October low at $463.10/mt for the second time in six sessions. A sustained move above this resistance could lead to a test of the 50% retracement level of $465.80/mt and the high of the four-week range at $466.10/mt.

The first study shows momentum indicators drifting sideways in the neutral zone of the stochastic momentum chart for more than one month as traders struggle for direction in this market.

The lines on the second study point to supportive commercial activity under this market, with the brown line representing the January/March spread and having narrowed from minus $9.60/mt to minus $8.70/mt over the past 10 days. This continues to reflect a bearish view of fundamentals, roughly 77% of full commercial carry, but the narrowest spread seen in over one month.

The red bars on the lower histogram shows a potential for noncommercial short-covering also a supportive feature for this market. This bearish net-short position was pared slightly in Nov.12 data for the first time in four weeks, from a net-short futures position of 78,794 contracts to a net-short of 78,150 contracts.


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