Since testing support at the November canola's 100-day and 200-day moving average in the last two days of 2017 trade, price has rebounded for three consecutive sessions with today's trade moving higher to close at $500.10/mt, above $500/metric ton for the first time in seven sessions.
Following the Nov. 30 high at $510.60/mt, Statistics Canada released a higher-than-expected production estimate for 2017 that has resulted in an expected sharp increase in 2017/18 ending stocks, which in turn become beginning stocks for the following crop year. Over the four weeks of December, the November contract fell to a low of $490.50/mt, a $20.10/mt or 3.9% drop.
Today's move saw the 50% retracement of this downtrend breached with a high of $501/mt reached, although today's close was just slightly below the $500.60/mt retracement level. Further resistance lies at $500.80/mt, the contract's 20-day moving average, as well as at $501.50/mt, the 50-day moving average.
P[L1] D[0x0] M[300x250] OOP[F] ADUNIT T
The blue line on the third study shows the Nov18/Jan19 futures spread at a neutral minus $4/mt (January trading over the November), although note that the January contract did not trade on Wednesday. This compares to the same spread on the soybean chart which is seen weakening, a sign of growing commercial bearishness.
The lower study points to the November canola/November soybean spread, measured in Canadian dollars/mt. Canola has strengthened relative to soybeans, reaching a low of $24.73/mt on Oct. 12 and closing at $47.54/mt on Wednesday.
DTN 360 Poll
This week's question asks what you think was the biggest story in Canadian agriculture in 2017. You can weigh in with your thoughts on this poll, which is found at the lower right of your DTN Canada Home Page.
Cliff Jamieson can be reached at firstname.lastname@example.org
Follow Cliff Jamieson on Twitter @CliffJamieson
© Copyright 2018 DTN/The Progressive Farmer. All rights reserved.