Canada Markets

Following five consecutive lower closes seen from Jan. 18 to Jan. 24, which led to a loss of $45.20/metric ton, the March contract has bounced back with four consecutive higher closes. for a $31.20/mt gain, a stretch not seen from Dec. 20 to Dec. 23. Today's close was $20.20/mt higher, while gains have totaled $31.20/mt over four sessions. The $20.20/mt gain on Jan. 30 is the largest daily gain seen since Dec. 2.

Today's close ended above the 38.2% retracement of the move from the December high to the January low, which is calculated at $825.40/mt. Should price hold above this resistance, the next upside target is $836/mt or the 50% retracement of this move.

The first study on the attached chart shows the March/May futures spread, which closed at $1.10/mt today, the strongest inverse seen in nine sessions and continues to reflect a mildly bullish view of fundamentals. This spread has closed in inverted territory since Dec. 8, except for a $1/mt carry seen as a result of the Jan. 26 close.

The blue bars on the attached histogram (second study) shows noncommercial traders increasing their bearish net-short position to 36,488 contracts as of Jan. 24, the largest bearish position seen since the week ending since Sept. 27. While the speculative crowd has held a bearish net-short position in all but two weeks since June 21, noncommercial traders tend to grow nervous when the net-short reaches levels close to the level currently reported. In late September, this position grew to 42,193 contracts net-short, while this position was pared in each of the seven following weeks prior to moving into net-long territory in the week of Nov. 15.

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

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