The November canola contract closed $26.80/metric ton higher on Thursday to end at $1,080.90/mt, the contract's largest daily move in more than 10 months, which saw the contract close back above its 20-day moving average on the daily chart. Today's move was a convincing one, with daily volume for the November contract at 10,790 contracts, the second-highest daily volume seen during the life of the contract.
Since May 2, the November contract has traded sideways overall, holding within a $76.30/mt range, with today's close just $1.15/mt above the mid-point of the range, which reached a May 17 high of $1,117.90/mt.
The first study on the attached chart shows the November/January futures spread rebounding from a recent low of minus $6.70/mt, while stretching higher over two of the three sessions since, reported at minus $4.40/mt on Thursday. This signals the potential of commercial activity in forward positions.
The blue histogram bars on the third study show the noncommercial net-long position in canola futures increasing for the first time in five weeks as of May 16, while note that this position of 38,320 contracts net-long remains close to the smallest bullish position seen in 34 weeks. This position is down 48.3% from the all-time high reached in January 2022. Compare this to the noncommercial activity in the soybean oil market, where the noncommercial net-long position on May 17 is down only 10% from the recent high reached in April.
The lower study shows the stochastic momentum indicators on the daily chart crossing and turning higher. By definition, this is not the most bullish of crossovers, which are reserved for crossovers that take place when prices are in oversold territory or below 20% on the chart. The last time a cross-over took place on a similar point on the chart was in the month of December, when the stochastic momentum indicators crossed near the lower end of the neutral zone on the chart when prices trended higher to the $1,128/mt high reached on April 28.
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