It was a risk-off day in the global oilseed and vegetable oil trade. November canola closed $13.40/metric ton lower at $796/mt, its first lower close in seven sessions. Today's close bounced from the session's $789.80/mt low, while recovered to close above the contract's 20-day moving average.
While not shown, Tuesday's move was linked to high volume trade, with 28,174 contracts traded in the November contract, the highest volume trade seen since June 30.
The blue line on the middle study shows the Nov/Jan contract spread continuing to weaken; this spread weakened $0.80/mt today, to minus $6.50/mt, or the weakest seen since June 30. This continues to signal a growing bearish view of fundamentals with harvest in very early stages. It also represents a stark contrast from the $9/mt inverse reached on July 17, or just over one month ago.
The red bars of the histogram on the lower study shows noncommercial treaders sharply paring their bullish net-long position in canola futures by 92% in the week ending Aug. 15 to just 1,302 contracts, the smallest net-long reported in five weeks. After holding a bullish net-long for five weeks, this group is clearly throwing in the towel when it comes to trade from the long side.
While not shown, it is interesting to note open interest in the November contract. As of Aug. 21, this is reported at 143,422 contracts, which is up 80.4% from the same day last year and 29.2% higher than the five-year average.
Cliff Jamieson can be reached at email@example.com
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