Canada Markets

November Canola Toys With Support

Cliff Jamieson
By  Cliff Jamieson , Canadian Grains Analyst
Connect with Cliff:
@CliffJamieson
April 27/28 trade for the November canola contract saw lows hold above the March low, although May 1 trade took out this support only to rebound and close unchanged. Stochastic momentum indicators on the first study are oversold on both the daily and weekly charts, which has failed to slow speculative selling. The histogram on the lower study shows noncommercial traders increasing their bearish net-short futures position for the first time in five weeks over the week ending April 25. (DTN ProphetX chart)
April 27/28 trade for the November canola contract saw lows hold above the March low, although May 1 trade took out this support only to rebound and close unchanged. Stochastic momentum indicators on the first study are oversold on both the daily and weekly charts, which has failed to slow speculative selling. The histogram on the lower study shows noncommercial traders increasing their bearish net-short futures position for the first time in five weeks over the week ending April 25. (DTN ProphetX chart)

November canola faced light, choppy trade on Monday, with price breaching the March low of $676.40/metric ton (mt) for the first time to reach a $672/mt low. Late-session commercial buying along with potential noncommercial short-covering interest drove price back to a close of $682.60/mt, unchanged from Friday's trade, avoiding a third consecutive lower close.

Daily volume in the November was 7,952 contracts, the lightest trade seen in four sessions.

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The histogram bars on the lower study show noncommercial traders increasing their bearish net-short position in canola futures for the first time in five weeks in the week ending April 25 at 62,640 contracts net-short. Bearish sentiment continues to prevail.

Fundamental data could be viewed as mixed for canola over recent weeks. The board crush margin has jumped back above $200/mt based on July contracts for canola, soybean oil and soymeal as of April 28, and the incentive to crush remains high. The Canadian Grain Commission reported today that week 37 and week 38 resulted in weekly exports that were higher than the volume needed these weeks in order to stay on track to reach the current AAFC export forecast, which was revised 200,000 mt lower in late April. As well, domestic disappearance is estimated at a volume that is higher than the volumes needed for these weeks to reach the current forecast. While actual demand remains encouraging, the ICE Exchange reported the track Vancouver basis weakening $5/mt to $55/mt over the July contract today.

In addition, last week Statistics Canada estimated seeded acres for 2023-24 at 21.597 million acres, slightly below the 21.7 million used by AAFC in its early forecast.

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

Follow him on Twitter @Cliff Jamieson

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April 27/28 trade for the November canola contract saw lows hold above the March low, although May 1 trade took out this support only to rebound and close unchanged. Stochastic momentum indicators on the first study are oversold on both the daily and weekly charts, which has failed to slow speculative selling. The histogram on the lower study shows noncommercial traders increasing their bearish net-short futures position for the first time in five weeks over the week ending April 25. (DTN ProphetX chart) 
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