Canada Markets

Over the past six sessions, the November 2022 ICE canola contract has traded above $850/metric ton five times, reaching a contract high of $855/mt on Feb. 16. While Feb. 17 trade saw price fall short of the previous session's high, it did result in a close above psychological resistance of $850/mt, up $1.30/mt to $850.30/mt.

As seen on the attached continuous November contract, further resistance lies at $854.30/mt (horizontal red line), which represents the 38.2% retracement of the move from the November 2021 high to the November 2022 low. A breach of this level could result in a continued move to the 50% retracement at $894.70/mt, or $40.40/mt higher.

It is interesting to note that the $850 level acted as support from July 12 through Sept. 22 period in 2021. It wasn't until late September when prices took off higher resulting in a high of $1,065.80/mt reached prior to expiry.

The red line on the first study shows the Nov22/Jan23 futures spread moving to a weak inverse of $1.20/mt on Thursday. One year ago, as seen on the lower study, this inverse was reported at minus $0.90/mt while this spread was negative on this date each year over the past five years, averaging minus $4.40/mt. The market continues to show a bullish approach taken in new-crop trade overall, although mildly bullish at best.

Watch for the potential for a sustained move above $850/mt, and the next test at $854.30/mt. Like last year, price could bounce along above $850/mt support for some time until there is further clarification over the potential for the 2022 production.

**

DTN 360 Poll

This week's DTN 360 poll asks your opinions about your approach to secure herbicide supplies for 2022. Please weigh in with your thoughts; you can find the poll on the lower-right side of your DTN Home Page.

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

Follow him on Twitter @Cliff Jamieson

(c) Copyright 2022 DTN, LLC. All rights reserved.