Canada Markets

Rapeseed for November delivery closed EUR 4.25/mt lower at EUR 440.75/mt on August 1, a sixth consecutive lower close on the daily chart while consolidating within the previous session's range in sideways trade.

Despite recent downward revisions made by European analysts for rapeseed crop production, concerns of delayed harvest in France due to precipitation and issues faced exporting rapeseed out of Ukraine, the November contract is trading below all major moving averages. The contract is testing support at the 61.8% retracement of the move from the contract's May 31 low to the July 20 high, calculated at EUR 440.13/mt as well as psychological support at EUR 440.

As seen on the attached chart, the rapeseed/canola spread ended the month of July at minus $104.42/mt USD (canola over rapeseed) while has narrowed slightly today. This is the widest monthly close seen in data going back to late 2002.

This will have trade implications and make it difficult for canola to move into this market without a correction that would lead to a narrower spread; canola prices could be dragged lower or rapeseed must see price appreciate.

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

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