Canada Markets

Canola's Seasonal Tendencies may Lend Support

Cliff Jamieson
By  Cliff Jamieson , Canadian Grains Analyst
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The trend in the nearby weekly closing canola price, as indicated by the red line, is closely following the five-year seasonal trend as indicated by the blue line. (DTN graphic by Nick Scalise)

While the seasonal index is just one of six factors followed by DTN used to generate strategy, the manner in which the actual weekly close (red line) has tracked the five-year seasonal price move for canola may be of interest as it shows the five-year seasonal low reached in the fourth week in September, suggesting that the pressure on prices may be nearing an end.

The weekly close for week 2 in September on Sept. 12 was reported at $413.70 per metric tonne, representing approximately 97% of the five-year seasonal index. Over the past two years, prices have tended to bottom in the fourth week in September at roughly 95% of the seasonal average, which could suggest that prices may be poised to break current support levels at $409/mt, although the downside move could be limited.

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Also supportive is the soybean market also tends to reach its seasonal low in the first week of October at roughly 93% of its seasonal average and from there prices tend to trend higher until May while reaching prices which are roughly 105% of the seasonal average.

Perhaps one more reason to look for prices to reach a nearby low is seen in the five-year price probability (not shown), yet another of the six factors followed. The November canola close of $413.70/mt falls in the lower 15% of the price range traded over the past five years. This in itself may not determine the direction of the market, although may lead to producers locking bin doors and a potential increase in buyer interest at what could be viewed as attractive levels.


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

Follow Cliff Jamieson on Twitter @CliffJamieson

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