November canola closed Jan. 21 trade up $16.50/metric tons, at $553/mt in Jan. 21 trade, down just $2.70/mt from the contract’s high reached on Jan. 14.
After four consecutive losing sessions that saw losses total $19.20/metric ton, November canola bounced back on Thursday with a $16.50/mt gain, recovering 86% of the most recent losses.
Buyers were active this session, with the November volume reported at 5,586 contracts on Thursday, which was the highest reported since Dec. 17 and the second-highest seen during the life of the contract. The November contract bounced from price levels slightly above the contract’s 50-day moving average (brown line) at $531.50/mt, while also closing back above its 20-day moving average at $543.40/mt.
The first study shows the new-crop Nov/Jan futures spread weakening $0.10/mt this session to minus $0.10/mt (January contract trading under the March), which is down from the recent $2.30/mt inverse reported as recent as Jan. 14, although continues to reflect a bullish spread overall. This spread has averaged less than $0.07/mt over the past three sessions, a sign of caution as traders evaluate the level of supplies available through the balance of the crop year in addition to the 2021 crop potential.
While not shown, the continuous November chart shows this week’s trade breaching resistance at $552.80/mt, the 61.8% retracement of the move from the 2012 high to the 2014 low, while the 67% retracement is calculated at $566.60/mt, the next upside target.
The inverted canola market has pushed trade into new crop positions. As of Jan. 20, open interest in the January contract is reported at 64,593 contracts, which is 206% higher than the five-year average of 21,116 contracts.
Cliff Jamieson can be reached at firstname.lastname@example.org
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