For the first time in eight weeks, the December oat contract tested resistance and failed, although it did close in the upper-end of the range traded over the past 13 weeks and also ended the week at a 13-week high. Over this 13-week period, the contract has traded between a low of $2.10 and a high of $2.41 per bushel. Thursday's high of $2.39/bu tested resistance of 1) the 38.2% retracement of the move from the contract's June high to October low at $2.38/bu 2) the contract's 100-day moving average at $2.37 1/2/bu and 3) the 13-week high of $2.41/bu.
Friday's trade saw the December contract end 1 1/2 cents higher at $2.31 1/2/bu within striking distance of resistance, with today's support coming from a combination of the contract's 20-day moving average at $2.27/bu and the contract's 50-day moving average of $2.27 1/4/bu while the close was higher despite the rally in the U.S. dollar.
Of interest is the lower study of the attached chart, showing the Dec/March spread (black line) moving into inverted territory on Tuesday of this week, while ending the week at a 6 3/4 cent inverse (December trading over the March). This is a sign of firm commercial demand in the near future.
A look back in time shows this same spread trading at a carry in four of five years on this date in the five-year period from 2010/11 to 2014/15. The average carry was 2.6 cents over this five-year period, which includes the 2013/14 crop year when the Nov. 13 spread was reported at a 17.5 cent inverse, a period of time when Canada's transportation crisis affected north-south movement and choked the movement of product.
The most recent AAFC supply and demand estimates have pegged 2015/16 oat exports at 2.125 mmt, down 4.6% from the previous crop year. Week 14 statistics shows year-to-date exports from licensed facilities at 324,200 mt, close to 2% ahead of the same week last year. Unlicensed exports play a significant role in meeting this total, with roughly 597,000 mt exported through unlicensed channels in 2014/15. Unlicensed exports reported for August are reported at 33,142 mt, below the volume shipped in August 2014.
Accessible on-line cash bids in Manitoba show prices nearing the $3/bu level.
Cliff Jamieson can be reached at firstname.lastname@example.org
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