Canada Markets

In the past 11 weeks, the November contract has reached a high of $8.98 per bushel on Feb. 2 and then again on March 7. Today's move higher of 3 1/2 cents to a close at $9.00 3/4 per bushel indicates a breakout from this range after closing higher for seven consecutive sessions.

Today's move also saw a close above psychological resistance at $9.00/bu. as well as a close above the November contract's 200-day moving average at $8.99 1/2/bu., the first such close since Dec. 4. Note the Dec. 4 close on the attached chart, which was followed by a 22 3/4-cent selloff in the next session on Dec. 7.

Today's high also came within 1/4 cent of testing Fibonacci resistance at $9.01 1/2/bu. (horizontal red line), which represents the 38.2% retracement of the move from contract's July 14 high of $9.85/bu. to the contract's $8.50/bu. low reached on Sept. 11. Should this market gain further strength, a further move to the 50% retracement of this same downtrend found at $9.17 1/2/bu. could be the next target.

The middle study shows momentum indicators on the short-term daily chart climbing rapidly into overbought territory above 80%, which could lead to a sudden change in direction resulting in a move lower.

The lower study indicates a less bearish sentiment held by commercial traders, with the Nov/Jan spread narrowing to minus 4 1/2 cents (January trading above the November, narrowing from a low of minus 5 3/4 cents on March 3 to the narrowest this spread has traded since Feb. 23.

It is interesting that this move comes at a time when the U.S. ending stocks estimate is seen increasing, which in turn becomes beginning stocks for 2016/17. Focus also remains on both the record-sized crop currently being harvested in Brazil, whose government increased its estimate for the size of Brazil's crop today to 101.18 million metric tons. Despite this, old-crop futures are also on the verge of breaking out of their 11-week range, with today's high falling just 1/2 cent below the range high.

Canadian producers should watch this future along with price action in the Canadian dollar for pricing opportunities. Bids reported for the Ontario market ranged from $11.25/bu. to $11.76/bu. for Thursday, while both the spot and December Canadian dollar showed signs of weakness today which could result in a change of the loonie's short-term trend and could lead to strengthening basis, as demand remains solid. As of January Statistics Canada data, Canadian cumulative exports were 12.9% above the September-through-January period in 2014/15 while 18.2% above the three-year average. Canadian crush also remains ahead of the pace needed to reach the current crush target of 2 mmt.

**

DTN 360 Poll

Federal and Provincial leaders met in Vancouver last week to talk about climate change. Recently, an Environment Canada speaker told a group of farmers in Manitoba that the province's ag industry may benefit from the impacts of climate change. What do you think? You can weigh in with your thoughts on DTN's weekly poll, found at the lower right of your DTN Home Page. Thanks for your participation!

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

Follow Cliff Jamieson on Twitter @CliffJamieson

(ES)

© Copyright 2016 DTN/The Progressive Farmer. All rights reserved.