November canola gained $3.10/metric ton on March 11 to close at $929.60/mt, while holding just below the $933.90/mt contract high reached on March 9. This reflects the eighth higher close in 10 sessions.
The attached weekly chart shows a fifth consecutive higher close, with the contract gaining $34.60/mt during the week, ending close to the upper end of the week's trading range, while weekly volume was lower this week but remains elevated.
The first study shows the Nov22/Jan23 spread over the course of the week weakening $0.10/mt, while continuing to reflect a bullish inverse of $1.60/mt. This time last year, this spread was shown at minus $3.70/mt or a $3.70/mt carry, while on average over the past five years, this spread averaged minus $5.24/mt on this date.
The lower study shows the noncommercial net-short position in canola futures increasing by a modest 1,475 contracts to a net-long position of 48,787 contracts as of March 8. This is the third weekly increase in four weeks, while the largest weekly increase seen in eight weeks although this net-long position is growing slowly. Prices remain overbought on the daily and weekly November charts according to stochastic momentum indicators (not shown) and this may act to slow speculative buying interest.
While not shown, the continuous November chart shows prices nearing a test of the 61.8% retracement from the November 2021 high to the November 2022 low at $935.10/mt, while a breach of this resistance could result in a continued move to the 66.7% retracement at $951.80/mt.
Wednesday's USDA reports included a lower revision for global vegetable oil production for the major vegetable oils by 1.76 million metric tons, to 211.44 mmt, while consumption was revised 1.2 mmt lower. Ending stocks were revised slightly higher to 24.17 mmt, which is the lowest stocks seen since 2016-17. At the same time, global stocks as a percentage of use are calculated at 11.6%, which is the lowest seen since 2003-04. During the past four years, global consumption of vegetable oils rose by an average of 2.25%, although higher prices may curtail use which bears watching when the USDA releases its first new-crop estimates in May.
Cliff Jamieson can be reached at email@example.com
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