CNS Canada –– Both old- and new-crop canola contracts traded on the ICE Futures Canada platform climbed to new highs on Tuesday, with a bullish reaction to U.S. supply/demand data providing the catalyst for the rally.
The most active July futures touched a session high of $544.60 per tonne, before settling Tuesday at $532.30.
The contract now finds itself above all of its major moving averages, with resistance on the weekly charts seen at around Tuesday’s session highs. If values manage to retest that point, the next level of resistance on the weekly charts is considerably higher — at about $600 per tonne.
Read Also
Alberta crop conditions improve: report
Varied precipitation and warm temperatures were generally beneficial for crop development across Alberta during the week ended July 8, according to the latest provincial crop report released July 11.
Trend lines are pointing decidedly higher, which bodes well for further gains from a chart perspective.
Underlying fundamentals also appear supportive, with crush margins reported by ICE Futures Canada actually improving slightly on Tuesday, despite the sharp $16.20 per tonne rise in the July futures.
Basis levels reported from domestic crushers and line companies widened slightly, but did not account for the full move in the futures. Cash bids reported by PDQinfo.ca were up by $10-$14 per tonne on Tuesday, to range from roughly $506 to $516 per tonne across Western Canada.
However, the relative strength index (RSI) sitting at 79, which implies that the market is overbought and possibly due for a profit-taking correction.
Many other calculations traders use to determine the strength and/or weakness of a futures contract, including stochastics and the MACD oscillator, are raising overbought flags.
— Phil Franz-Warkentin writes for Commodity News Service Canada, a Winnipeg company specializing in grain and commodity market reporting. Follow CNS Canada at @CNSCanada on Twitter.
