Canada Markets

The uncertain outlook for canola in 2021-22 is sure to extend into the 2022-23 crop year. The next crop year will face a number of challenges, including tight carry-in stocks, potentially dry conditions, inflated input prices, chemical residue issues and reluctant marketers after the reduced crop size in 2021 and the massive move in futures experienced as a result.

The new-crop November contract closed $15.70/metric ton higher on Nov. 2, the largest one-day move higher since Aug. 24, ending the session at $753.70/mt and close to the $755.50/mt intra-day high. This is a fresh contract high for the new-crop contract, while looking back at the continuous November contract, is the third highest November trade ever, with the November 2021 contract reaching a high of $1,065.80/mt on Nov. 2 while the November 2008 contract reached a high of $772.10/mt in the month of March 2008.

The Nov. 2 move was a result of the largest daily volume seen over the life of the contract at 1,182 contracts as seen on the lower study of the attached daily chart. As of Nov. 1, open interest in this contract was reported at 7,066 contracts, which is down sharply from the 23,120 contracts reported on this date one year and below the five-year average of 9,151 contracts.

The middle study on the attached chart shows a bullish inverse in the Nov 2022/Jan 2023 spread, although this bears watching. The Nov. 2 session resulted in a $15.70/mt gain in the November contract while the January contract settled $22.50/mt higher, with the spread reduced by $6.80/mt to a $2/mt inverse, signaling a less-bullish view of fundamentals ahead in 2022-23 that bears watching.

Cliff Jamieson can be reached at cliff.jamieson@dtn.com

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