Canada Markets

November canola settled $13.40/metric ton lower at $700.90/mt on Thursday, a second daily loss, after failing to test the recent April 10 high of $724/mt during Wednesday's session.

Despite the weakness that totals $15.50/mt over two sessions, the November contract is up $7/mt after four days of trade, poised for its first higher close on the weekly chart in three weeks. This comes at a time when the old-crop July canola contract is currently $8.40/mt lower this week, new-crop soybean oil is showing a modest gain over four sessions and both new-crop soybeans and soymeal are showing very modest losses.

Since mid-March, the November contract has traded over a $64.40/mt range, with today's move resulting in a move back below the midpoint of this range, or the 50% retracement of the move from the March low to April high of $706.60/mt.

At the same time, trade bounced from a low of $700.30/mt this session, settling close to the 61.8% retracement of the move from the March low to April high which is calculated at $701/mt. A continued breach of this support could lead to a slide to the April low of $688.60/mt.

While the stochastic momentum indicators (first study) on the daily chart are seen gradually rolling over, the weekly chart shows these indicators in oversold territory, which will act to slow noncommercial selling.

The lower study shows the Nov23/Jan24 contract spread narrowing slightly to minus $4.90/mt this session. This is close to the weakest spread seen in nearly months while showing signs of stabilizing after weakening over the past four sessions.

Uncertainty remains ahead of Statistics Canada's April 26 release of planting intentions, which could prove supportive over the upcoming days.

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

Follow him on Twitter @Cliff Jamieson

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