Canada Markets

European rapeseed for February delivery closed EUR 13.50/metric ton (mt) lower on Monday to EUR 564.25, its largest one-day loss since Dec. 2, closing below the support of its 20-day moving average. This is the fourth consecutive daily loss that has seen this contract drop EUR 30.50/mt or 5.1%, with daily volume of 8,572 contracts indicating the largest daily volume since Dec. 2 and the fifth highest over the life of the contract.

This follows last week's move that saw this contract's weekly high fall just EUR 3.25/mt below psychological resistance at EUR 600/mt on Jan. 4. The contract's 50-day moving average was seen at roughly EUR 599.43 for that session, also acting as upside resistance, while the 38.2% retracement of the move from the November high to December low at EUR 598.06 also added to the resistance seen in this region of the chart.

Unlike canola's March/May spread, which strengthened on Jan. 9 and reflects a bullish inverse of $3.20/mt, the Feb/May rapeseed spread weakened by EUR 2.25/mt to minus EUR 7.75/mt, its weakest level seen over the life of the spread. This reflects a bearish view of market fundamentals. Over the past five years, this spread has shown as a carry (May trading higher than the March) on just two years on this date, with the largest carry seen at minus EUR 1.75/mt. The five-year average is calculated at a EUR 16.20/mt inverse, largely due to the extremely large inverse seen on this date in 2022 of EUR 69.50/mt.

While not shown, the 61.8% retracement of the move from the contract low to contract high is calculated at EUR 549.10/mt, just slightly below the March contract's December low. A breach of the December low at EUR 550.50/mt and the EUR 549.10 level could signal a continued slide.

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

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