Canola

[Kodiak]

I'm no expert at technicals, but is anybody seeing a bull flag developing in July canola? If so, where would you measure from to establish an objective? $500 the bottom of the flag pole?? If that's the case, then wow! $670?? Get out your oxygen masks!

[boarderbloke]

look at the monthly Canola chart, think were heading to challenge June 2008 prices, June08 closed at $662.30

http://futures.tradingcharts.com/chart/CA/M?anticache=1333654775

[MLamirandeRM]

Canola futures that been on a strong bull run for the past month are now starting to be seen as 'toppy' by some analysts. Canola futures have soared recently due to tight old crop supplies, smaller than anticipated 2012 US soybean acreage, and downward revisions to the South American soybean crop. Analysts are speculating that the upward momentum will soon start to slow, and while values are likely to hold firm, some consolidation at these levels is possible. Near term, tight old-crop ending stocks below the 800,000 mt level will provide support. We disagree that the bull run is over for canola. Prices up to $660/mt are not out of the question going forward, especially if canola fails to buy as many acres as some are projecting.

Michelle - Farms.com Risk Management

[furrowtickler]

I agree, with one acception - old crop stocks are being pulled out hard and will continue till june/july, and will end up between 5-600,000 mt. Expenses are much higher and alot of money is being spent everywhere, canola has to move. Jmo

[Kodiak]

The consolidation looks to me like it is almost done, post the USDA report run-up. Appears most evident in old crop, but even in the Nov. To me the chart looks like it is about to break out after coiling (hourly chart) and forming a flag since March 30. The question is, which way is it going to break? Odds look to favour an upside breakout based on past direction.
BUT. I'm no expert, and I'm the first to admit it. Others may see something different or more persuasive telling us something different......

[Hopperbin]

I just priced the first 20 percent of my new crop for 12.58 and not a high amount one of my reasons is I think a lot of pricing has been done already. Advisor saying to get to 40 percent so way ahead of their game with my first sale. I get to deliver off the combine so that is a plus. With the high acreage and shit happennning n the world. And we have this new crop price??????

[cottonpicken]

The bull run started around the middle of
december.The trend has broken now,to the
upside,power uptrend.

Canola has cleared resistance but is waiting for beans
to do the same.

Michelle,if beans can make 17,click your heels three
times,because your not in kansas anymore,time to
run the fib numbers.

The chart doesn't look right,imo, for this to happen
but we do have momentum and volume.

This is probably going to play out very quickly,with
big moves to the upside and downside.

So my number is 16,but when the tech breaks down i
will change my mind,thats the great thing about
charting,emotion removed.

[errolanderson]

Don't share your ongoing canola bull
optimism. Still maintain that the Cdn
canola market is quite overbought and
due for a possible nasty correction if
the funds spook.

Global economies slowing, QE3 appears
dead, inflation is in-check, precious
metal prices are in-decline and in
general commodity prices are falling.
And this morning, U.S. jobs number were
released, a huge disappointment.

If the credit world again suddenly
tightens,no one will much care about
whether Canada has 700,000 or 900,000MT
of canola left over.

If the cash market makes a run for these
lofty levels, it be with the speed of a
SWAT team.

Errol

[bucket]

Errol, you said


errolanderson posted Mar 21, 2012 12:37
--------------------------------------------------------------------------------
Markets can do anything, but given the
setback in canola yesterday, $600/MT
becomes a tough resistance zone to
break.

If funds lose confidence, canola could
slip another $20/MT quickly. The ball is
in their court, but technicals scream
overbought right now. Canola needs fresh
bullish news soon or market is at risk
of failure. Malaysian palm oil peak is
also likely in.

Errol


Canola made a quick move to 620 a few days after that comment. Here is hoping history repeats itself.

[bucket]

I said in another thread

bucket posted Mar 23, 2012 18:52
--------------------------------------------------------------------------------
Yeah, after reading some of these so called experts comments on other threads,I targetted some canola yesterday only to have the target trigger before I woke up this morning.

You can thank me later. Its probably going to put in a good rally next week.

Still have some to sell, but will be looking for that 13.75 to 14 dollar range. """


It hit 14 but I didn't take my own advice there either.

Will look this week to move some more.

[errolanderson]

bucket . . . Those comments were made
ahead of the bullish soybean USDA
report. $600/MT canola was a heavy
resistance zone prior to USDA. Markets
change if they get a fresh dose of
bullish news that triggers massive fund
buying. That's what occurred on that
Friday driving canola above $600 and
beyond.

But IMO, doesn't change the fact that
canola remains in a technically
overbought zone. Monday morning will be
another interesting test. If the funds
hold true to their current positions,
the bull flag that Kodiak has
highlighted may show some punch.

My point right now is the higher this
market flares, the bigger the potential
sell-off when it occurs. Should stock
markets tumble Monday morning, canola
may struggle to hold its recent gains.
Equity markets may sway the entire
commodity complex.

bucket . . . I wish you all the best in
your cash sales. No one knows where the
top of this rally is, but it will
exhaust and then sell-off. From a farm
pricing point of view, it is generally
better to sell cash grain into a rising
market than to wait for the sell-off.
Why? Because the ride down is a lot
quicker than the ride up.

Errol

[furrowtickler]

Errol I hope you are wrong but history shows you may well be right.

[Kodiak]

Errol, you are right. Most bull markets are a stair climb up and an elevator ride down. So the question is "on which floor do the bulls step into the elevator?" I might quibble with your "overbought" sentiment. Aside from the absolute number($6oo )I don't see it in the technicals.

Canola fundamentals have been on our side, helping drive the market higher. They get a bit of help periodically from beans and outside markets. Money flow, and currency markets seem to loom larger and larger. We'll soon see if the bull flag plays out. After the US jobs report on Friday, I'm thinking suddenly talk of QE3 will be back on Monday. Will this be enough to confirm the bull flag?

I'm holding off further sales for now. Why? Tight fundamentals. Positive crush margins. An inverted market. Firm basis levels showing no signs of immediate weakening. "Talk" of monetary easing. The need for risk premium during the growing season until the crop is "made". The RSI at 66 isn't screaming at us, the Bolinger bands aren't violated, and the Stochastics have embedded themselves above 80.
What makes me most nervous? The commitment of traders showing funds heavily long. However, that can be overcome if the commercials step in and increase their ownership.... http://snalaska.net/cot/current/charts/S.png

[bucket]

Here is what I ask myself about canola.

How much production do we need for demand? The canola council has set a target of 15 MMT by 2015.

Our current production has been said to be short of demand creating a run up in prices that started before the 2011 harvest. The pipeline was close to being empty. This year won't be any different.

If the acres come in at 21 million and normal weather returns, there is a good chance that on a bpa yields won't be as good.

A 5 bpa drop over the entire crop puts us at about the same production as last year. This means no rebuild in stocks and leaves the pipeline close to empty or at the very least some price rationing to take effect.

The soil maps indicate at this time there is a better chance of lower yields this year and that leaves me bullish on canola even with large seeded acres.

Then factor in that wheat and durum will be worth 8 bucks off the combine. That may factor in how to grab any canola from producers that are covering costs using cereal grains.

Charts may say one thing, but dry soil and heat may say something 180 degrees to that. Its just that charts lag the dry soil and heat.

[charliep]

I would watch the demand/consumption
side as soybean prices increase. China
represents about 55 MMT out of 89 MMT
world soybean trade. If they pull back,
soybean prices will start to slide.
They have also been known to wash sales
when delivered prices are higher than
the market.

With South American soybean harvest in
full swing, the world is not short
soybeans. New crop maybe different.
Canola is tight old crop. New crop will
be a matter of discussion.