Canada Markets

Over the past 15 trading days, the January canola contract has traded between a low of $419.30 per metric tonne and a high of $445.60, a range of $26.30/mt, with Tuesday's close just above the mid-point of this range. Since the Oct. 28 low at the beginning of the 15-day period, canola has gained 3.3% as opposed to the 1.7% gain found in the January soybean contract.

The canola price continues to be caught between its own tight fundamental situation and the bearishness of the soybean situation, with a record U.S. crop combined with what is expected to be a large South American production.

The accompanying chart indicates the five-year seasonal index for canola (blue line) tends to drift sideways through November, December and into January, which suggests that the sideways trade currently experienced could linger. Despite the onset of the South American crop, the five-year seasonal pattern has seen prices reach a low in mid-January to continue to rally into May/June.

Additional supportive features may also be found in a lack of producer selling over the upcoming weeks, while technical chart support may be found at $420.20/mt, the 50% retracement of the September low to the November high, as well as the 50-day moving average at $418.20/mt, which is trending horizontally on the chart.

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

Follow Cliff Jamieson on Twitter @CliffJamieson

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