Canada Markets

Today's $21.90/metric ton drop in the November canola contract was the largest one-day drop seen since July 31. For a second week, the November contract has reached a fresh low on the weekly chart, this time to the lowest trade in more than 10 weeks while to the support of the contract's 100-day moving average at $741.80/mt.

A breach of this support could quickly lead to a test of the contract's retracement support at $733/mt, or the 50% retracement of the move from the contract's May 31 low to the July 19 high.

The blue line in the middle study shows the Nov23/Jan24 futures spread weakening to minus $8.70/mt, close to the minus $8.80/mt spread reported on Sept. 12 which is the weakest seen during the life of the spread. This is only a dime away from the minus $8.60/mt spread seen on this date one year ago, while at the same time it's the weakest spread seen on this date in 12 years.

The red bars on the histogram in the lower study show noncommercial traders moving from a bullish net-long to a bearish net-short during the week ending Sept. 12, the first bearish position seen in nine weeks. This was reported during the same week that Statistics Canada revised lower their forecast for prairie production.

It would seem both the commercial and noncommercial sides are hesitant and favorable signals of export demand are needed.

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

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