Canola on the Move

Adam Pukalo |

March canola has rallied since December 1st $70t to where I write this at $880t.  

It seems like another run at $900t could be in sight.

Support I have now is $810t and resistance is $900t.

Short term, I want to see March canola hold $860t or it could be headed back lower. 

A lot of producers I talk to still have canola in their bin and got nervous when we saw the decline last month. 

Now might be the opportunity to move some grain at that $20bu level.

If you are wanting to hold onto your canola, consider how you could buy a put option to protect yourself.

You may be in the position where you want to hold onto your canola, but need to move it before next years crop comes in. 

Right now you can buy a May put option (expires April 21st) for $50t ($1.13bu) approx.

There are strategies I'm going to be discuss with clients about new crop protection as well.


Canola March Futures - 1 Year  

Chart sourced from Market Q


















All three wheat contracts put in their recent low on December 9th and have increased the rest of this month.

Ideas that there could be significant damage to the winter wheat crop due to extreme cold-weather, plus strength in other grains helped support.  

Wheat is now overbought given the recent rally and could be due for a pullback.

Next year's Russian wheat harvest is now seen at 86 million tonnes, up 400,000 tonnes from a prior estimate, according to SovEcon.

This would still be down from 101.2 million tonnes this year. 

We might see speculators drive up the price in the short term, but the trend is still more sideways to lower.  

I believe spikes up like this might be a good opportunity for farms to catch up on physical grain sales they want to make.

Minneapolis Wheat March Futures - 1 Year

Chart sourced from Market Q

















Chicago Wheat March Futures - 1 Year

Chart sourced from Market Q

















Kansas Wheat March Futures - 1 Year

Chart sourced from Market Q


















 The dry weather in Argentina and Southern Brazil has triggered new speculative buying in soy markets. 

Traders are talking about record Brazil corn and soybean crops, but lower in Argentina

Late planted Argentina crops could help if the weather changes and the crop goes through the yield determination periods under favorable conditions. 

However, it seems like current dryness could lower final planted acres.

Next weeks Argentina weather is key with demand bears looking for a 2023 top in prices soon. 

Any short supply out of Southern Brazil or Argentina could threaten to tighten meal stocks further and this may keep buyers active. 

While soybeans are at a 6 1/2 month high, technical indicators are not overbought. 

Soybean March Futures - 1 Year

Chart sourced from Market Q


















 The cattle market is in a short-term overbought condition, but with the bullish supply outlook shift into the 1st quarter, breaks look like buying opportunities.

This week February live cattle hit a contract high on Tuesday and short-term technical indicators are showing overbought status.

Traders await further news on the cash market.

Cattle futures may be in a position to see cash markets trade higher after the very harsh weather late last week and over the weekend, and a strong gain in beef prices this past week.

The shift in US beef production from the fourth quarter this year to the first quarter of 2023 shows a near record decline, and this is a bullish supply factor for the February contract. 

Feeder Cattle March Futures - 1 Year

Chart sourced from Market Q

















Live Cattle February Futures - 1 Year

Chart sourced from Market Q