Canada Markets

November canola settled $5.40/metric ton higher at $619.30/mt on March 7, a sixth higher close in nine sessions. Today's trade resulted in a bullish outside bar formed on the daily chart for a second consecutive session.

The contract reached a contract low on Feb. 7 at $590.60/mt, which is the lowest November contract trade since March 31, 2021, or close to three years when the November 2021 contract reached a low of $573.10/mt.

Nearby upside resistance is seen at the contract's 50-day moving average at $623.10/mt, just $0.70/mt higher than today's session high. We haven't seen a close above the contract's 50-day moving average since Nov. 20-21, while we haven't seen an extended period of daily closes above the 50-day since Sept. 11.

A completion of the rounded bottom pattern is seen with a breach of $646.30/mt, indicated by the horizontal dotted line, drawn from the Jan. 23 high. This could lead to a continued move to the 100-day moving average, calculated at $660.90/mt, and the 38.2% retracement of the move from the August high to February low, calculated at $663/mt.

The current pattern of trade is seen as noncommercial or speculative traders hold a record bearish net-short position of 153,185 contracts, as reported by the CFTC as of Feb. 27.

Bullish news will be needed to spark a sudden flurry of short covering. While the March 11 Statistics Canada 2024 acreage estimates could include a surprise, pre-report indications suggest there will be only a minor change from the area seeded in 2023. Drought concerns could play a role in spring, although after significant precipitation across much of the prairies over the past month, these concerns have eased at the moment in many areas.

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

Follow him on X, formerly known as Twitter, @CliffJamieson.

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