Canada Markets

Canola's Five-Year Price Probability Chart

By Cliff Jamieson , Canadian Grains Analyst
Canola's five-year price probability measures the percentage of time that the front-month contract trades over any given futures price. The blue bar marks the point at which the nearby future trades higher 33% of the time, while the red bar represents the most recent weekly close. (DTN graphic by Scott R Kemper)

The five-year price probability chart for canola provides a snapshot of how the current price relates to its price movement over the past five years, measured by the percentage of time that the market has traded above various price levels. The chart utilizes the weekly close of the nearby contract, in this case the November future.

The blue bar is an indicator of the futures level where prices have traded higher 33% of the time, or in other words, the top third of the price range over the five-year period. As seen on the attached chart, prices traded above the blue bar, or $535/mt, one-third of the time over the past five years.

The red bar represents the latest weekly close for the November future, which is the Nov. 1 weekly close of $481.70. At this level, prices over the past five years have traded higher approximately 43% of the time. A marketing strategy to sell product in the top third of the market would involve the red bar moving to the right of the blue bar.

Canola's five-year seasonality chart (not shown) indicates a sideways trend through to the first week in December, when canola reaches its low for the year and begins its traditional rally which ends with its seasonal high in early June.

Canola's Vancouver cash basis narrowed $3/mt to $21/mt over the January future in today's trade, the first indication of a change in the export basis since Oct. 21 when the basis narrowed $2/mt to $18 over the January. This move will hopefully be followed by a similar action in country basis levels.


I will be attending Agri-Trade in Red Deer on No. 7 and 8. Feel free to drop by the DTN booth to say hi on either of these days, from 9 a.m. until noon and between 2:30 p.m. and 5 p.m. Hope to see you there!

DTN 360 Poll

What do you think of the current backlog in shipping on the Prairies? Is it simply the size of the crops, or is it due to the railways? Perhaps it is the terminals? You can weigh in on this week's DTN 360 Poll. Your participation is appreciated!

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

(ES)

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