May European rapeseed has closed higher in seven of the past nine sessions, with a third consecutive higher close achieved in April 6 trade with a EUR 4.25 gain to EUR 368.
Friday's close of EUR 363.75 per metric ton (mt) was slightly above resistance of the 38.2% retracement of the move from the contract's January high to March low, while the April 6 session extended this move, clearing the path for a continued move to the 50% retracement at EUR 373.88 and the 50-day moving average at EUR 377/mt.
This move is seen despite the overall reduction seen in transportation and fuel requirements linked to the COVID-19 spread, which will be faced in the biodiesel demand.
The black line on the first study of the chart shows the May/August spread, which compares old-crop versus new-crop futures, nearing a bullish inverse for the first time since March 12, signaling front-end demand.
The lower study points to the canola/rapeseed spread, valued in U.S. dollars. This spread reached a March high of $89.52/mt on March 9 and a low of $47.88/mt on March 24, while has since recovered to $70.55/mt on April 6, retracing more than 50% of the downtrend seen over the month.
This can be viewed as a supportive feature for Canadian exports and prices. The Canadian Grain Commission's February data shows exports to Western Europe, totaling 1.2344 million metric tons (mmt), slightly higher than the 1.217 mmt exported to Japan.
As of week 40 of the European crop year, imports of canola into Europe are reported at 4.929 mmt by the European Commission, up 44.7% from the previous crop year and 52% higher than the volume imported in 2017-18.
On April 6, USDA released their Australia Oilseeds and Products Annual report for 2020-21. While this attache report sees a potential for Australia's production to rebound by 33% or 770,000 metric tons in 2020, exports are forecast to grow only by 400,000 mt. USDA notes the potential for Canadian-Australian competition for homes in Europe could lead to a potentially increased flow of Australian seed to China, allowing for a continued flow of Canadian seed to Europe in 2020-21.
DTN 360 Poll
This week's poll asks what you think of the conflicting reports on March 31 on Canada's canola trade with China and how this might affect your seeding intentions. We look forward to your ideas on this poll, found at the lower-right of your DTN Home Page.
Cliff Jamieson can be reached at email@example.com
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