Despite a weaker Canadian dollar trade and a higher close in soybeans and soybean oil, with July soybean oil reaching its highest level in over five weeks and closing near the upper-end of the session's range, canola ended the session mixed, with pressure on the front-end and the back-end and modest gains in the middle months.
The July contract gained as much as $3.50/metric ton on Wednesday to a high of $468.30/mt. The move breached the near intersection of the contract's 20-day moving average at $467.20/mt and the 50-day moving average at $467.50/mt. The move also saw price moving above the 50% retracement of the move from the May high to May low at $466.50/mt, while stalling at the 61.8% retracement level at $468.30/mt.
The session ended with a loss of $1.30/mt, the fourth daily loss in five sessions.
British Columbia's Supreme Court ruled against Huawei Chief Financial Officer Meng Wanzhou, with the ruling released in the minutes prior to Wednesday's close which led to late-session selling. Although appeals and further court challenges are expected, Canada's case for Meng's extradition to the United States can move forward, which is widely expected to lead to a further deterioration in Canada-China relations. Canola trade in the final minutes of today's session may be a sign of what lies ahead.
The blue bars of the histogram on the second study of the attached chart shows noncommercial traders slowly paring their bearish net-short over recent weeks. A favorable pace of spring planting over much of the Prairies along with Wednesday's news may encourage speculators to add to this position in coming weeks.
While not shown, commercial traders continue to hold a bullish net-long position in canola futures. While this position has been reduced over each of the past three weeks and is the smallest net-long position seen in five weeks, this is counter to what we see across the soy complex. Commercial traders in soybeans, soybean oil and soymeal futures held a bearish net-short position as of the most recent data for May 19. This bears watching.
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